India Inc ramps up exports as Iran ceasefire reopens Middle East trade

Kolkata | Mumbai | New Delhi: India Inc is moving rapidly to capitalise on the Iran war ceasefire by resuming exports and restoring factory utilisation in the region to full capacity. Companies are also bracing for a potential surge in orders amid expectations of reconstruction activity in the war-affected countries.

Pharma companies reported a pickup in export demand as countries sought to replenish medicine inventories, while packaged food makers said supplies are normalising, with distributors willing to absorb higher freight costs to avoid shortages.

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Manufacturers of electrical goods including air-conditioners, refrigerators, wires and cables are gearing up for higher orders. The Middle East, a key export market for Indian consumer goods firms, saw business drop 40-50% last month due to the conflict.

"India can take a larger share of the reconstruction demand in the Middle East given its strong regional ties and proximity," said Anil Rai Gupta, chief executive at Havells India. The company earns about 40% of its export revenue from the region and sees significant opportunity in cables and wires.

India's largest staples company, AWL Agri Business will resume shipments to Dubai's Jebel Ali port, restoring supply chains across the region. "Distributors are willing to bear higher freight costs to ensure supply of essentials," said executive deputy chairman Angshu Mallick. "We expect volumes to return to 4,000-5,000 tonnes per month." During the war, the company sent shipments through Oman.

The two-week ceasefire, announced on Wednesday, has paused hostilities, though tensions in the region remain high. This has kept major shipping companies on a wait-and-watch mode before sending their vessels through the vital Strait of Hormuz waterway.

Companies with local plants, including Parle Products and Dabur India, are also returning to full capacity.

Parle Products vice president Mayank Shah said its Bahrain plant will ramp up to full capacity from 70-80% last month, while AC maker Blue Star is preparing for increased reconstruction-linked demand.

Exporters, including small and medium enterprises, have resumed engagement with partners as shipping routes reopen. The reopening of the strait is expected to ease logistics, with freight and insurance costs-earlier up 40-50%-beginning to soften.

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"The ceasefire and reopening of the Strait of Hormuz provide a much-needed respite for exporters, helping ease logistical bottlenecks, soften freight rates, and moderate insurance costs," said Ajay Sahai, director general of the Federation of Indian Export Organisations (FIEO). "While this may improve trade movement in the near term, the temporary nature of the truce warrants a cautious approach."

Drewry's World Container Index (WCI) Composite jumped 21.59% to $2,309 per 40-foot container on Thursday, from $1,899 on February 26, following a series of general rate increases by ocean carriers. Week-on-week, the index edged up marginally by 0.96% from $2,287 on April 2.

Sahai said some buyers have called to proceed with shipments as they are ready to take delivery of goods, noting that new demand will be generated if the ceasefire is extended.