New Delhi — The restoration of peace in the West Asian region is expected to revive the order books of Indian exporters and reduce input costs, as the US-Iran war severely disrupted the movement of consignments, exporters' body FIEO said on Thursday.
The Federation of Indian Export Organisations (FIEO) said that the conflict in West Asia suppressed India's trade volume, with exports to the Middle East suffering a sharp decline during the peak of the disruptions. Core sectors bore the brunt of the regional instability, it said.
Order Book Revival and Demand
"With the cessation of hostilities and the broader economic integration of the region, we anticipate an immediate and robust revival in order books," said FIEO President SC Ralhan. A stable West Asia unlocks pent-up consumer and industrial demand, paving the way for Indian exporters to scale up their presence and accelerate shipment trajectories over the next few fiscal quarters, he added.
Logistics and Strait of Hormuz
On the logistics front, Ralhan said the immediate reopening of the Strait of Hormuz, through which roughly half of India's crude imports and a vast chunk of container traffic passes, is the single most significant relief for global supply chains. The lifting of the US naval blockade and the restoration of normal traffic eliminate long maritime detours, making India's exports to the EU, the US, and West Africa much more competitive.
"Exporters were previously crushed by exorbitant freight fees and prohibitive war-risk insurance premiums. Normalisation will slash these overheads, ensuring smoother, faster and remarkably cheaper transit times to West Asia and European destinations," Ralhan said. During the conflict, ships carrying Indian consignments took the longer route around the Cape of Good Hope, encircling the African continent to avoid turbulent waters, resulting in delivery delays and increased costs.
Currency and Inflation
The easing of the energy bottleneck has also brought optimism to the currency market. "The reduction in dollar demand from oil refiners, combined with robust foreign capital inflows, has given the Indian Rupee a firm footing, strengthening it significantly down toward 94-94.50 against the US Dollar," Ralhan observed. For exporters, a stable and predictable currency ensures safer hedging, protects margins, and eliminates the volatility that historically plagued long-term trade contracts.
Reduced pressure on the Current Account Deficit (CAD) gives the overall economy strong fiscal manoeuvring room, he said. The conflict had spiked Brent crude to elevated levels, pushing up India's wholesale inflation.
Impact on Export Competitiveness
The FIEO noted that the restoration of peace will revive order books and reduce input costs across core sectors. A summary of key impacts is shown below:
| Aspect | During Conflict | Post-Peace Outlook |
|---|---|---|
| Freight costs | Exorbitant due to longer routes and war-risk insurance | Normalised, cheaper transit |
| Insurance premiums | Prohibitive war-risk premiums | Reduced to regular levels |
| Shipping route | Via Cape of Good Hope (long detour) | Strait of Hormuz (direct) |
| Indian Rupee vs USD | Weaker due to dollar demand from oil refiners | Strengthened to 94-94.50/USD |
| Order books | Sharp decline in exports to Middle East | Immediate robust revival |
| Crude oil prices | Elevated, spiking inflation | Stabilised, reducing cost pressures |
With the conflict's end, Indian exporters are poised to regain competitiveness in key markets. The reopening of the Strait of Hormuz alone is expected to slash shipping times and costs, while currency stability improves margin predictability. FIEO's outlook suggests a multi-quarter acceleration in export growth as pent-up demand in West Asia and beyond is released.
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