Strait of Hormuz Crisis Delays Indian Exports and Raises Shipping Costs

India’s exporters are facing delays, higher freight rates and rising logistics costs as the continuing crisis around the Strait of Hormuz disrupts shipping through one of the world’s most important maritime corridors. The disruption has affected vessel availability, container movement and port operations, forcing exporters to deal with longer transit times and additional surcharges.

The impact is particularly significant for Indian businesses that depend on maritime trade with West Asia and other markets connected through Gulf shipping routes. Exporters of agricultural products, engineering goods, chemicals, textiles and other commodities are facing higher costs and uncertainty as shipping lines reroute vessels, insurance premiums rise and congestion builds at alternative ports. The government has already introduced measures to support exporters facing extraordinary freight, insurance and war-risk costs.

Why Is the Strait of Hormuz Crisis Affecting Indian Exports?

The Strait of Hormuz is a critical maritime chokepoint connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea.

For India, its importance goes beyond crude oil and energy imports. The route also connects Indian exporters with major markets in the Gulf, including the UAE, Saudi Arabia, Qatar, Kuwait and other countries in the region.

When shipping through the area becomes risky or restricted, vessels can be delayed, diverted or forced to use longer routes.

That increases both the time and cost required to move Indian goods to overseas customers.

Impact on Indian Exporters	Effect
Vessel diversions	Longer transit times
Container shortages	Delayed shipments
Port congestion	Slower cargo movement
War-risk surcharges	Higher freight bills
Insurance costs	Higher shipment expenses
Longer routes	Greater fuel and operating costs

Shipping Costs Have Risen Sharply

The disruption has created significant pressure on international shipping rates.

Indian exporters have reported higher freight costs on routes connecting India with West Asia, with rates on some routes rising substantially as shipping companies introduce emergency surcharges and adjust their networks.

The shortage of available vessels and containers has added to the problem.

When ships are delayed at ports or avoid particular routes, equipment such as containers can become unavailable in other parts of the network. This creates a chain reaction that can affect exporters far from the original disruption.

For smaller exporters operating with thin margins, even a relatively modest increase in freight costs can make an international order significantly less profitable.

Port Congestion Is Making the Problem Worse

The crisis is also affecting Indian ports.

Western Indian ports such as Mundra and Jawaharlal Nehru Port have faced congestion as shipping schedules become disrupted and exporters attempt to adjust cargo movements.

When vessels arrive later than planned or schedules change repeatedly, containers can remain at ports for longer periods.

That can lead to additional storage, detention and demurrage charges.

Exporters may also have to pay more for alternative shipping arrangements when their original vessels are delayed or cancelled.

The result is that the cost of the disruption extends beyond the basic freight charge.

Which Indian Exports Are Being Hit?

The disruption has affected several categories of Indian exports.

Agricultural commodities are particularly vulnerable because many products have limited shelf lives and depend on predictable shipping schedules.

Tea and basmati rice shipments to Gulf markets have faced disruptions, while exporters of engineering goods have also reported difficulties.

Engineering products, machinery, chemicals, textiles, garments and other manufactured goods can also face higher costs when freight rates rise.

For exporters working under fixed-price contracts, the problem can be especially serious.

A company may agree to sell goods at a particular price months before shipment. If freight and insurance costs rise sharply before the goods leave India, the exporter may have limited ability to pass the additional expense to the customer.

Agricultural Exporters Face Additional Risks

Agricultural exporters have fewer options when shipments are delayed.

Products such as fresh produce, food items and certain processed agricultural goods can lose value when they spend longer periods in transit.

Even commodities with longer shelf lives can face problems if delivery schedules become unpredictable.

Tea and basmati rice exporters have been among the businesses affected by the disruption, with some shipments reportedly put on hold as exporters assess freight costs and shipping availability.

Longer transit times can also create problems with buyer commitments and inventory planning.

The Crisis Is Affecting Importers Too

Although the immediate focus has been on exports, Indian importers are also facing higher logistics costs.

India depends heavily on imported crude oil, natural gas and other commodities.

The disruption around Hormuz has increased uncertainty around energy supplies and shipping routes, while higher insurance and freight costs can raise the landed cost of imports.

For businesses that use imported raw materials, the higher cost can eventually move through the supply chain.

Manufacturers may face increased production costs, while consumers could ultimately see higher prices if businesses pass on part of the additional expense.

Indian Exporters Are Looking for Alternative Routes

Businesses and shipping companies are exploring alternative routes to reduce dependence on the disrupted corridor.

Some cargo can be rerouted through ports and shipping corridors outside the most affected areas, but alternatives are often more expensive or slower.

Land-based routes can also provide limited alternatives for certain destinations, although they have their own capacity and cost constraints.

The problem is that there is no simple substitute for a major maritime chokepoint.

When large volumes of global trade are forced to move through alternative routes, those routes can quickly become congested.

Insurance Costs Are Rising

War-risk insurance has become another major concern for exporters.

When shipping through a region is considered more dangerous, insurers can increase premiums or introduce additional war-risk charges.

Shipping companies may then pass those costs on to customers through emergency surcharges.

This can make it difficult for exporters to estimate their final logistics expenses.

A shipment that was commercially viable when the order was placed can become significantly more expensive by the time it is loaded onto a vessel.

Government Introduces Support Measures

The Indian government has recognized the impact of the disruption on exporters.

In March 2026, the government approved RELIEF, or Resilience & Logistics Intervention for Export Facilitation, under the Export Promotion Mission.

The intervention was designed to support exporters facing extraordinary increases in freight, insurance and war-risk costs caused by disruptions in West Asian maritime logistics.

The measure provides the government with a framework to respond to changing logistics conditions rather than relying on a fixed support mechanism.

This could become increasingly important if disruptions continue for an extended period.

Smaller Exporters Could Face Greater Pressure

Large exporters may have more flexibility to negotiate freight rates, use multiple shipping providers or redirect cargo through alternative routes.

Smaller businesses often have fewer options.

A small exporter may depend on a limited number of shipping lines and may not have enough volume to negotiate favourable rates.

Higher freight costs can therefore have a disproportionate impact on smaller businesses.

For companies operating on low margins, the additional logistics expense can affect cash flow, order profitability and their ability to compete with exporters from other countries.

Indian Export Competitiveness Could Be Affected

Higher logistics costs can weaken India’s competitiveness in international markets.

If an Indian exporter has to pay significantly more to deliver a product than a competitor located closer to the customer, the Indian company may have to reduce its profit margin or increase the price.

This becomes particularly important in sectors where buyers can easily switch suppliers.

The longer the disruption continues, the greater the pressure on exporters to find more efficient routes and renegotiate commercial arrangements.

The Crisis Could Reshape Supply Chains

The disruption may also encourage Indian companies to rethink how they manage international supply chains.

Businesses could diversify shipping routes, maintain larger inventories of critical inputs and build relationships with multiple logistics providers.

Some companies may also explore alternative markets that are less dependent on Gulf shipping routes.

Such changes can increase resilience, but they can also raise operating costs.

Maintaining additional inventory or using multiple suppliers requires more working capital and more complex logistics management.

Global Shipping Companies Are Also Under Pressure

The Hormuz crisis is affecting international shipping companies as well.

Major carriers have had to adjust routes, manage vessel availability and account for higher operational and security costs.

The disruption has already weighed on the financial performance of major shipping companies, illustrating how a geopolitical crisis can spread through the global logistics industry.

When shipping companies face higher costs, exporters and importers ultimately bear part of the burden through freight rates and surcharges.

What Happens If the Crisis Continues?

The duration of the disruption will determine how severe the impact becomes for Indian trade.

If shipping conditions improve relatively quickly, freight rates and port congestion could gradually normalize.

However, a prolonged crisis could create deeper changes in trade routes, inventory strategies and supplier relationships.

Exporters may have to permanently diversify logistics arrangements rather than treating the current disruption as a temporary problem.

The longer the crisis lasts, the more likely businesses are to incorporate geopolitical and maritime risks into their long-term supply-chain planning.

Looking Ahead

The Strait of Hormuz crisis is creating a growing challenge for Indian exporters by increasing freight costs, delaying shipments, reducing vessel availability and adding uncertainty to international trade. The effects are particularly significant for businesses shipping to West Asia, where congestion, rerouting and war-risk surcharges are increasing the cost of moving goods. Agricultural exporters, engineering companies and other manufacturers are among those facing pressure as logistics conditions become less predictable.

For India, the disruption highlights the importance of building more resilient export supply chains and reducing dependence on individual maritime chokepoints. Government support can help businesses absorb some of the immediate cost increases, but exporters will ultimately need to diversify routes, logistics partners and markets. If the crisis persists, higher shipping and insurance costs could become a longer-term factor affecting India’s export competitiveness and the pricing of goods in international markets.