Exporters' logistics costs may jump 20%

India's exports could face 15-20% higher logistics costs due to the Israel-Iran tensions, experts said.

The Pakistan air route is already closed to India's carriers and now the closure of Iran's airspace will add to air cargo costs.

The higher fuel costs will make sea transport costlier-crude was trading 8% up at press time.


"We are watching the situation. There could be a temporary disruption of some exports, but it is too early to say," said an official.

In FY25, India's goods exports to Israel were $2.1 billion and imports were $1.6 billion, while with Iran, the shipments were $1.2 billion and $441.9 million, respectively. While the supply of rough diamonds from Israel to India could get impacted, New Delhi may still be able to supply cut and polished diamonds to countries that otherwise depend on Israel for the precious stones.

Ajay Sahai, director general of Federation of Indian Export Organisations (FIEO), said the closure of the Pakistan air route and the Iran air route will add to costs.

"Shipping lines disruption is expected on the Red Sea and Suez Canal route. Earlier, trade had begun through the Red Sea, but now voyages will become irregular, bringing huge uncertainties," Sahai said.

Generally, air freight is 7-8 times costlier than sea freight.

"There could be a small hit to food exports, but we don't see a concern there because food-related disruptions are usually resolved at the earliest," said another official.

The recent gradual movement of Indian export consignments was being seen as one of the drivers for the country's goods and services exports to cross $900 billion in FY26.

The gradual movement signalled a cautious recovery in shipments after months of disruptions on the route caused by regional tensions. Around 80% of India's merchandise trade with Europe passes through the Red Sea, and substantial trade with the US also takes this route.