The Federation of Indian Export Organisations (FIEO) has urged the Reserve Bank of India (RBI) to provide liquidity support to exporters, amid a sharp rise in freight costs due to the ongoing war in West Asia conflict. The disruption has led to delays in shipments and an elongation of payment cycles, putting pressure on exporters’ working capital requirements.
“Logistic disruption has resulted in freight (rates) going up. In fact, freight (rate) to some of the Middle East countries has gone up to 300-400 per cent. It has brought pressure on air shipments also. Since logistics have been disrupted, the supply of goods to buyers have been delayed. Earlier, my ships were reaching the US coast in 50 days. Now, they are reaching in 90 days. The payment cycle to the exporter, which used to be 30-60 days, has elongated to 90-120 days,” said Ajay Sahai, director general and chief executive officer, FIEO.
“We require much more credit and that is why we are requesting the central bank to provide some liquidity to exporters. The cost of credit is also an issue. We expect the government to remove the cap that it has brought on interest subvention,” he added.
Recently, RBI decided to continue key trade relief measures introduced in November 2025 to support exporters amid ongoing geopolitical and logistical disruptions.
Exporters will keep benefiting from the extended timeline for realisation and repatriation of export proceeds, which remains at 15 months instead of the earlier nine months. The RBI also extended the enhanced export credit period of 450 days for both pre- and post-shipment credit, now applicable to disbursals made until June 30, 2026 (compared with March 31, 2026 earlier).
Sahai highlighted that India’s free trade agreement (FTA) strategy has become more focused, targeting complementary economies and key export markets. Agreements with the United Arab Emirates (UAE) and Australia have been followed by progress with European Free Trade Association (EFTA) countries — Switzerland, Norway, Liechtenstein, and Iceland — which have committed to invest $100 billion in India over the next decade.
From 2025 through to early 2026, India has advanced FTAs with the UK, Oman, New Zealand, and the European Union (EU). Negotiations are ongoing with the United States (US), Qatar, Gulf Cooperation Council (GCC), Peru, Chile, Canada, Israel, and the Eurasian Economic Union (EAEU). The FTA with Oman is expected to become operational from June 1, while agreements with the UK and EU could be finalised soon.
Separately, Soumya Kanti Ghosh, group chief economic advisor at State Bank of India, said India’s export sector has held up well despite a year marked by geopolitical tensions, tariff volatility, and supply chain disruptions, even as he cautioned that ongoing disturbances in West Asia pose fresh risks to growth and trade.
“I think it is actually a significant coincidence… I saw a tweet (post on social media platform X) that the Strait of Hormuz has been opened and crude prices have dropped to below $90 per barrel,” Ghosh said, adding that the latest export data also offered encouraging signs. “It does not seem that there was any war last year because the exports of goods and services have actually expanded,” he noted.
Ghosh expressed optimism that India could move towards the $1 trillion exports milestone. “The good thing is that I think we ended the year quite well, and I hope that this year will be even better,” he said. However, he flagged rising geopolitical risks, particularly from the escalating conflict in West Asia. The current episode, he said, has evolved into a broader regional conflict, with implications for global energy markets and supply chains.
Ghosh said India entered the uncertainty triggered by the West Asia conflict from a position of relative strength, with growth around 7.6 per cent, compared with weaker starting points during past crises.
He also flagged logistical challenges arising from the conflict, including rerouting of shipping lines via the Cape of Good Hope, leading to higher freight costs, longer transit times, and container shortages. Currency volatility has added to the pressures, with the rupee witnessing depreciation amid global uncertainty.
Despite these headwinds, Ghosh said the impact on the financial sector has remained limited. Banks and non-banking financial companies (NBFCs) have entered the current phase with strong buffers, and asset quality risks appear contained.
He also pointed to a recent uptick in remittances from West Asia, though he cautioned that flows could be affected if the regional slowdown persists.
On the macroeconomic front, growth is expected to moderate. “Even if we grow close to 7 per cent this year, that will be a credible achievement,” Ghosh said, while flagging inflation risks from imported factors such as energy and commodities.
Government support measures, including extended export credit timelines and logistics interventions, have provided some relief to exporters. Ghosh, however, said the trajectory of the conflict and energy prices will remain key determinants of economic outlook.
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