Exporters have suggested shifting cargo movement from Bandar Abbas port to the Chabahar port in the wake of Iran-Israel conflict, stating any further escalation in the war would severely impact trade with Afghanistan, Central Asia, and Russia, an industry official said on Friday.
The official also said that the air freight rates have already seen a 15 per cent rise, and traders expect both air and sea freight costs to increase further if the conflict escalates.
This was suggested during a meeting convened by the commerce ministry on assessing impact of the war on India's trade. It was chaired by Commerce Secretary Sunil Barthwal.
The official also said that while there has been no immediate impact on shipments to Iran, disruptions are likely if the situation worsens.
"If Bandar Abbas port doesn't function, it will affect exports not only to Iran but to Afghanistan and Central Asia also. We have been informed that there is adequate capacity at Chabahar, and this needs to be explored urgently," the exporter said.
Also Read
Operation Sindhu: Iran opens airspace for Indian evacuation flights
What Happens if Trump Decides to Strike Iran or Assassinate Its Leader?
What is Samson Option, Israel's nuclear threat that's no longer a theory?
US strike on Iran would expose limits of China's influence in region
Stock market close: Sensex up 1,046 pts, Nifty tops 25K as markets snap 3-day fall; all sectors gain
The official, who attended the meeting, said that the secretary assured that the feasibility of shifting operations to Chabahar port would be examined.
A Federation of Indian Export Organisations (FIEO) official said that they would soon hold a meeting with Chabahar port authorities on the issue of shifting the movement of consignments.
"We will enquire about the facilities at the port," the official said, adding, "The shifting call will have to be taken by the shipping lines. DG shipping would look into that." If Strait of Hormuz gets impacted due to the war, "we have to look at Fujairah port in UAE and Oman port", the official said.
FIEO flagged that as of now, Iran's Bandar Abbas port is operational and being used for cargo movement to Afghanistan and other CIS (Commonwealth of Independent States) countries, including Russia.
However, if the conflict continues beyond Monday, the route may be impacted.
"In case ship movement in the Persian Gulf is blocked, exports to Gulf and Mediterranean countries will also suffer. Currently, buyers have put orders on hold, and exporters are delaying shipments due to concerns that goods may get stuck at ports, leading to heavy demurrage," another industry official said.
Although certain factors remain beyond control, in the current circumstances, focus on Chabahar Port -- an Indian-managed port in Iran -- could help the industry.
There is connectivity via Dubai and direct linkage from Kandla Port.
Due to the conflict, Basmati rice exports to Iran have reportedly stopped, and shipments to the Middle East have become expensive.
An exporter said there is a need to improve Chabahar's connectivity to Uzbekistan by engaging local players who may otherwise lose business if Bandar Abbas operations are affected.
As per the exporting community, freight has risen by USD 500-600 per 20-feet container. Ocean freight from Indian ports to EU and Mediterranean ports has surged by USD 1,000 per TEU (twenty-foot equivalent unit).
The meeting was attended by senior officials from the petroleum, commerce, shipping, and financial services, revenue departments, along with representatives from shipping lines, cargo handlers, and airport authorities.
While the Red Sea route remains unaffected and 90 per cent of Indian cargo currently moves via the Cape of Good Hope, concerns were raised about potential disruptions at the Strait of Hormuz.
This narrow waterway, only 21 miles wide at its narrowest point, handles nearly a fifth of global oil trade and is indispensable to India, which depends on imports for over 80 per cent of its energy needs.
Meanwhile, the exchange of strikes between Iran and Israel has entered the second week on Friday even as President Donald Trump weighed US military involvement and new diplomatic efforts appeared to be underway.
At the same time, Iran's foreign minister is in Geneva for holding talks with his counterparts from France, Germany and the UK and the European Union's foreign policy chief. It is the first face-to-face meeting between Western and Iranian officials since the start of the conflict.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Connect with us on WhatsApp
More From This Section
Core sectors' growth plunges to a 9-month low of 0.7% in May 2025
Premium
MPC minutes: Frontloaded rate aimed to support growth, faster transmission
NTRS 2025 shows faster cargo clearance at ports, delays at ICDs persist
EPFO warns zonal and regional offices over delay in relieving transfers
Indian deposits in Swiss banks fall 18% over 10 years, shows SNB data
Output growth in India’s eight core infrastructure industries plummeted to a nine-month low of 0.7 per cent in May from an upwardly revised figure of 1 per cent in April, with half the sectors clocking sharp contractions.
Electricity generation contracted for the first time in nine months, with a 5.8 per cent drop that marked the sharpest downturn since June 2020. Crude oil output dipped 1.8 per cent, shrinking for the fifth straight month.
Fertilisers production contracted for the second month in a row, with May’s 5.9 per cent drop being the sharpest since February 2024, while natural gas output (-3.6 per cent) shrank for the 11th successive month.
ALSO READ: No fuel in Delhi for old vehicles registered anywhere in India from July 1
On the positive side, growth in cement production accelerated to 9.2 per cent in May, recovering from April’s six-month low uptick of 6.3 per cent. Steel output also picked up pace and grew 6.7 per cent during the month, compared to a revised 4.4 per cent uptick recorded in April, which was the weakest in seven months.
Also Read
ADB announces $10 billion plan to transform India's urban infra, services
Justice for homebuyers key, says PM Modi in ？62,000 cr PRAGATI review
April 2025 IIP dips to 8-month low at 2.7%, manufacturing grows 3.4%
India reaffirms global health commitment at 78th World Health Assembly
These 2 smallcap industrial products stock zoom 20% on strong Q4 results
“Clearly, the pick-up in infrastructure activity has aided steel production. Demand from construction and auto besides capital goods would account for this increase. Cement too did very well, which is reflective of the government activity in the capex space,” said Bank of Baroda chief economist Madan Sabnavis.
Coal production growth decelerated a tad to 2.8 per cent from 3.5 per cent in April, while refinery products output grew 1.1 per cent in May after a 4.5 per cent contraction in the previous month.
The eight core sectors constitute 40.27 per cent of the Index of Industrial Production (IIP), which had fallen to an eight-month low of 2.7 per cent in April from an upward revised figure of 3.94 per cent in March. Economists now expect industrial output growth to drop to 1.5 - 2 per cent in May.
ALSO READ: Final RBI norms on project financing positive for power finance corp
Base effects also affected last month’s growth print, as the Index of Core Industries (ICI) had risen 6.9 per cent in May 2024, which was the highest in the past 13 months.
“Excess rains in the latter part of May 2025, owing to the early onset of the monsoon, likely weighed on the performance of the electricity and some of the mining sectors in the month. However, the YoY performance of the steel, cement, refinery products and crude oil sectors improved in May 2025 vis-à-vis April 2025, partly offsetting the deterioration in the performance of the other sectors,” said Rahul Agrawal, senior economist, ICRA Ratings.
Connect with us on WhatsApp
More From This Section
Premium
MPC minutes: Frontloaded rate aimed to support growth, faster transmission
Fifth edition of Time Release Study shows faster import clearance at ports
EPFO warns zonal and regional offices over delay in relieving transfers
Indian deposits in Swiss banks fall 18% over 10 years, shows SNB data
India's core sector growth plunges to nine-month low of 0.7% in May