Ministry Sets Up Weekly Trade Watch

India's Ministry of Commerce and Industry is setting up a structured weekly system to monitor export-import flows and pinpoint stress in various industries. This move is a response to global tensions that are disrupting supply chains and driving up costs for Indian businesses. The goal is to allow for quick action, rather than waiting to react to problems.

Exporters Flag Rising Costs, Shipping Woes

Exporters voiced serious concerns during meetings on March 9. They pointed to higher costs for packaging materials and problems with international shipping, especially for trade with West Asia. Global events are expected to affect the supply and price of essential petrochemicals such as polymers and resins, making packaging more expensive. Small and medium-sized enterprises (MSMEs) are finding it particularly hard to cope with these rising input costs because they lack the size to absorb them.

Key Sectors Face Pressure, Seek Support

Sectors like apparel, leather, telecom, and medical devices are facing significant pressure from supply chain issues, logistics hurdles, and escalating costs. Businesses are asking the government to ensure steady supplies of key materials like LNG, helium, and petrochemicals. They also stressed the importance of quick Goods and Services Tax (GST) refunds to improve cash flow, a frequent problem for companies. Shipping delays, particularly to West Asia, are adding to these supply chain strains.

Government Orders Port Efficiency Boost

Commerce Secretary Rajesh Agrawal highlighted the need to quickly assess crucial packaging materials, checking domestic production and import needs. In response, the Ministry of Ports, Shipping and Waterways has instructed ports and terminals to improve transparency and efficiency. Actions planned include publishing port fees, checking on bunker fuel supplies, and speeding up the removal of delayed containers. The goal is to ease logistical problems that are slowing down trade.

West Asia Conflict Hits Key Trade Route

The conflict in West Asia is creating challenges for Indian exporters sending goods to the Gulf. India's trade with the region totaled $178 billion in 2024-25 ($56.87 billion exports, $121.67 billion imports). Disruptions along this vital trade route, leading to higher shipping costs and longer delivery times, could impact India's trade balance and make its export industries less competitive. This situation is similar to past periods when regional unrest affected global markets and shipping.

Outlook: Lingering Risks for Exporters

While the new monitoring system acknowledges the issues, concerns remain about addressing the underlying causes of rising costs and fragile supply chains. India's dependence on imported petrochemicals, LNG, and helium leaves manufacturing sectors exposed to global supply shocks. MSMEs, in particular, may face difficulties with sustained high input prices and uncertain logistics, which could affect production and employment. The repeated call for prompt GST refunds points to ongoing liquidity management challenges. If geopolitical tensions continue, a sustained rise in global shipping and raw material costs could squeeze profit margins for Indian exporters.