Exporters worried by UAE trade disruption, rise in freight rates, Pg15

Key Highlights:

• Indian exporters are concerned about potential trade disruptions with the UAE due to escalating conflict in West Asia.
• The UAE has become India's second-largest trade partner after the US following the FTA in 2022.
• India's exports to the UAE from April 2025 to February 2026 reached $32.84 billion, while imports totaled $56.59 billion.
• The Commerce and Industry Ministry held consultations to review the geopolitical situation's impact on India's EXIM cargo flows.
• Stakeholders agreed to maintain close coordination for monitoring routes, capacity, surcharges, and equipment availability.

Detailed Insights:

• The conflict in West Asia is impacting trade with the UAE, a key hub and India's 4th largest market for textile and apparel exports in 2024.
• Rising logistics and insurance costs due to the conflict are putting pressure on exporters' narrow margins and contractual obligations.
• The UAE serves as a crucial gateway for India's engineering goods exports to the West Asia and North Africa (WANA) region.
• Disrupted flight operations have stranded export consignments at Indian airports, leading to requests for waiver of demurrage charges.
• Rerouting of exports via the Cape of Good Hope is expected, increasing transit times and freight costs for trade with Europe and the US.
• Uncertainty surrounding the US tariff issue and recent reductions in RoDTEP rates are compounding challenges for Indian exporters.
• Potential blockage of the Strait of Hormuz could disrupt global oil flows and negatively impact the engineering sector's competitiveness.

Key Concepts Involved:

• FTA (Free Trade Agreement): An agreement between two or more countries to reduce or eliminate trade barriers.
• EXIM (Export-Import): Refers to the flow of goods and services in and out of a country.
• RoDTEP (Remission of Duties and Taxes on Exported Products): A scheme for refunding taxes and duties incurred in the export process.