New Delhi: India's trade with West Asia is seen gaining momentum in the coming months as the US-Iran peace agreement is set to restore confidence in shipping through the Strait of Hormuz, a critical energy and trade corridor. Industry bodies and trade experts expect the easing of logistics disruptions to lower freight and insurance costs, improve cargo movement and revive exports to the Gulf Cooperation Council (GCC) region after months of conflict-driven uncertainty.
The peace pact to end the war that had started end February is set to be formally signed in Switzerland on Friday.
India's exports to West Asia fell sharply from $6.48 billion in January to $2.62 billion in March before recovering to $5.30 billion in May. Imports from the region also fell from $15.11 billion in January to $8.16 billion in March, before rebounding to $10.74 billion in May, according to the latest commerce ministry data.
A. Sakthivel, chairman of the Apparel Export Promotion Council (AEPC), said the reopening of the Strait of Hormuz marks a turning point for India's exports, particularly for the apparels industry that faced severe logistics challenges in recent months.
Sakthivel said exporters were burdened by emergency war-risk surcharges ranging from $500 to $2,000 per container, extended transit times, vessel rerouting, higher insurance costs and rising packaging and raw material expenses. These disruptions not only increased export costs but also affected delivery schedules that are critical for global fashion supply chains.
"The restoration of normal shipping through one of the world's most important trade corridors is expected to lower logistics costs, improve supply-chain reliability and restore buyer confidence," he said, adding that the development could help Indian apparel exporters regain competitiveness and support stronger export growth in the second half of 2026.
Echoing similar optimism, Vinod Kumar, president of the India SME Forum, said the Gulf region remains one of the most important export markets for Indian micro, small and medium enterprises (MSMEs), accounting for significant shipments of engineering goods, food products, textiles, apparel, pharmaceuticals, chemicals, plastics, handicrafts, furniture, packaging materials and technology-enabled services.
Kumar said improved stability in the region could create an additional export opportunity of $10-12 billion for Indian MSMEs, with exports to GCC countries potentially growing 12-18% over the next 14-18 months.
He noted that engineering and industrial MSMEs could benefit from the ongoing GCC investments in infrastructure, manufacturing, energy transition and logistics, while food-processing exporters supplying rice, spices, processed foods, marine products and fresh produce may gain from more predictable supply chains.
Textile, garment, leather, lifestyle and handicraft exporters are also expected to benefit from stronger retail demand and inventory restocking across the region, Kumar said.
He added that smaller exporters stand to gain the most from reduced freight volatility and faster cargo movement, as lower logistics risks and improved shipment certainty could enhance their competitiveness and encourage expansion into new markets and product categories.
The reopening of the Strait of Hormuz would help restore access to Jebel Ali, a key trans-shipment and distribution hub for Indian exports to West Asia and Africa, said Ram Singh, professor and head at the Centre for Distance and Online Education (CDOE) at the Indian Institute of Foreign Trade (IIFT).
Singh said pent-up demand in GCC countries, coupled with lower logistics and insurance costs, could support higher export volumes and values. Lower energy prices, improved business sentiment and easier access to Dubai's financial ecosystem may also boost India's services exports and remittance inflows from the region, he added.
The Confederation of Indian Textile Industry (CITI) expects the agreement to improve prospects for India's textile and apparel sector. Responding to Mint's query, CITI secretary general Chandrima Chatterjee said the expected return of stability in West Asia is a source of optimism for the MSME-led textile industry.
She noted that uncertainty surrounding cargo movement through the Strait of Hormuz had placed considerable pressure on exporters. If stability returns and shipping disruptions ease, India's textile and apparel exporters would be better positioned to expand in West Asian markets, particularly across the GCC, she said.
Greater confidence in uninterrupted shipping and regional stability could also help exporters negotiate with buyers more effectively and convert existing demand into new business opportunities, Chatterjee added.
“Our country has long maintained a robust trading relationship, primarily driven by oil and gas imports from the GCC, which got disrupted due to West Asia conflict. Among GCC countries, the UAE is India's leading export market that saw exports down 18% during Apr-May, which is now expected to see a positive growth with the peace deal in place,” said Saurabh Sanyal, secretary general at industry chamber Assocham.
“The reopening of the Strait of Hormuz following the US-Iran peace deal is a welcome development for global trade and India’s engineering exporters. It will reduce logistics disruptions and costs, improve export prospects to the WANA (West Asia North Africa) region, and support overall trade stability," said Pankaj Chadha, chairman of EEPC India, the export promotion body for the engineering sector.