Exporters say even a modest rise in freight and insurance could squeeze the already thin margins and make it harder to meet contracts.
“Any escalation in logistics and insurance costs due to the West Asia scenario puts us in a very tight spot,” said Confederation of Indian Textile Industry chairman, Ashwin Chandran.
A senior executive at a leading apparel exporter, who declined to be named, said key meetings with Middle East buyers have been cancelled in the middle of the shipping season. “Orders are under execution. If the Red Sea closes, logistics costs will rise and turnaround time could increase by 15-20 days,” the executive said.
The Gulf Cooperation Council (GCC) comprising Saudi Arabia, UAE, Oman, Qatar, Bahrain and Kuwait remains a key trade and economic partner for India, particularly for apparel. India’s apparel exports to the GCC stood at $1.8 billion in FY25. “Coming in the backdrop of the continuing uncertainty on the US tariffs issue and the recent reduction in the rates under the Remission of Duties and Taxes on Exported Products Scheme, the tumultuous developments in West Asia have further added to the challenges faced by Indian textile and apparel exporters,” Chandran said.
“Considering the narrow margins under which textile and apparel exporters operate, any escalation in the cost of logistics and insurance due to the West Asia scenario puts them in a very tight spot, affecting their ability to meet contractual obligations besides significantly raising operating costs,” he pointed out.
brace for delays & higher costs on shipments to uae
Vinod Thapar, chairman of Knitwear Club in Ludhiana, said that the Middle East is among the most important overseas markets for knitwear products manufactured in the city. “A substantial share of garments manufactured in Ludhiana is supplied to the Middle Eastern markets. But the current tension has led buyers to adopt a cautious stance, weakening overall trade sentiments.”Thapar pointed out that petroleum derivatives also form the backbone of man-made fibres such as polyester, viscose and nylon, which account for a growing share of global apparel consumption. Oil is the primary raw material for polyester yarn derived from petroleum based hydrocarbons.
“Crude prices have already gone up and it will impact manufacturing of man-made fibres,” he said.
Tirupur, producing over 40% of India’s knitted garments is navigating a tight fashion cycle.
“The orders for April are at various stages. Some have already been shipped. And some are being manufactured. And any delay in its delivery has financial implications which may result in discount pressure on offseason garments,” said Raja M Shanmughan, former president, Tirupur Exporters Association.