Indian exports to Gulf nations have plunged by nearly 65 per cent amid the ongoing Iran conflict and disruptions along key shipping routes.
The crisis has triggered logistical bottlenecks and a sharp fall in shipments, according to economists and export organisations. Despite the downturn, government authorities maintain that exporters will gradually adapt by diversifying markets and managing operational challenges.
The fallout has been particularly severe for Kashmir’s handicrafts sector. Exports have stalled, and several major international exhibitions in the UAE and Europe—where Kashmiri exporters were scheduled to participate—have been cancelled. More than 600 orders for carpets and Pashmina products have reportedly been scrapped, leaving over 4.5 lakh artisans and traders facing a deep financial strain. Key events such as the Indian Carpet Expo have also been postponed due to disrupted travel and declining buyer interest.
West Asia has traditionally been a significant market for Kashmiri handicrafts, including Pashmina shawls, wood carving products, and traditional headgear.
Secretary in the Department of Commerce, Rajesh Aggarwal, recently stated that while the crisis poses short-term challenges, exporters are expected to adapt by exploring alternative markets and adjusting logistics.
“West Asia accounts for around 12–13 per cent of our exports, so it is directly impacted. If the situation persists, supply chains affecting other regions may also face disruptions,” he said, adding that the government is closely monitoring developments.
The conflict has also affected movement through the Strait of Hormuz, a critical global trade route, with Iran restricting shipments through the corridor. Nearly 10 per cent of shipments passing through the route are now considered highly vulnerable.
India’s overall exports have also recorded a dip. In March, exports declined by 7.44 per cent to $38.92 billion. However, annual figures show marginal growth, with merchandise exports rising 1 per cent to $441.78 billion in 2025–26. Services exports were estimated at $418.31 billion, pushing total goods and services exports up by 4.22 per cent year-on-year to $860 billion.
The crisis has put over $11 billion worth of Indian exports at risk. Around 23,000 containers carrying goods such as basmati rice, spices, fruits, and meat products are currently stranded at ports or stuck in transit due to high freight costs and disrupted shipping routes. The situation has particularly impacted farmers and exporters dealing in perishable commodities.
Additionally, nearly $4.5 billion worth of electronics exports—largely routed through the UAE—are under threat.
Exporters have also flagged steep freight surcharges and what they describe as a “war tax” on trade due to the ongoing conflict. In response, the government is engaging with banks to address war-risk insurance concerns and working with exporters to identify alternative logistics solutions.
