May 2026 | Source: Commerce Ministry
India's exports to West Asia fell 28 percent in April 2026 compared to the same month last year. That single number tells you how severe the impact of the Iran-US-Israel conflict has been on one of India's most important regional trade relationships.
West Asia — the Gulf countries, Iran, Iraq and surrounding markets — collectively buys a significant share of India's total merchandise exports every year. Rice, basmati, spices, textiles, gems and jewellery, engineering goods, pharmaceuticals, meat — all of these flow from India to Gulf markets in large volumes. When that market suddenly becomes inaccessible because ships cannot transit the Strait of Hormuz safely, the damage shows up fast.
→ Hormuz Crisis June 2026 — India Trade Impact
→ ECGC Export Credit Insurance 2026 — Complete Guide
What Happened and Why
On February 28 2026 the United States and Israel launched airstrikes on Iran. Iran retaliated by closing the Strait of Hormuz — the narrow waterway through which roughly 25 percent of the world's seaborne oil and 20 percent of global LNG flows every day. For India, over 40 percent of crude oil imports and 90 percent of all LPG imports pass through this single chokepoint.
When Iran closed the Strait, shipping through the Gulf effectively stopped. War risk insurance premiums shot up. Vessels avoided the region. And Indian exporters who had confirmed orders with Gulf buyers suddenly had no way to get their goods there at a cost that made commercial sense.
The result showed up in April 2026 trade data — a 28 percent fall in exports to West Asia. That is not a rounding error. That is a genuine collapse in trade flows to a region that is among India's top export destinations.
Which Indian Export Sectors Were Hit Hardest
Basmati rice took one of the biggest hits. Iran, Iraq, Saudi Arabia, UAE and Yemen together account for roughly 50 percent of India's total basmati exports by volume. In 2024-25, India exported over 6 million tonnes of basmati worth more than Rs 50,000 crore — of which Rs 36,000 crore came from Middle Eastern markets alone.
When the conflict escalated, around 400,000 metric tonnes of Indian basmati were stuck — 200,000 tonnes in transit at sea and another 200,000 tonnes stranded at Indian ports because shipping could not proceed. Exporters were rerouting some vessels via the Cape of Good Hope, adding 14 to 25 days to transit time and sharply raising freight costs. For a commodity like basmati where buyer payment terms are already stretched, longer transit times create severe working capital pressure.
Gems and jewellery faced a different but equally serious problem. Dubai serves as the primary transit hub for rough diamonds and gold bullion entering India for processing and re-export. When the Gulf became inaccessible, raw material supply chains for India's gem and jewellery sector — centered in Surat and employing nearly one million workers — were directly disrupted.
Textiles, spices, pharmaceuticals, engineering goods and meat exports to Gulf buyers all faced the same combination of problems — higher freight costs, unavailable shipping slots, war risk surcharges that made shipments uneconomical, and buyers in the Gulf who could not confirm delivery timelines for their own customers.
The Numbers Behind the 28 Percent Fall
| Sector | West Asia Exposure | Impact |
|---|---|---|
| Basmati Rice | 50% of exports go to West Asia | 400,000 MT stuck — transit and ports |
| Gems and Jewellery | Dubai is primary raw material hub | Raw material supply disrupted |
| Non-Oil Exports to West Asia | USD 48 billion annually at risk | Shipping delays and insurance spike |
| Crude Oil Imports | 40% of imports via Hormuz | Prices surged — Brent crossed USD 82-84 |
| LPG Imports | 90% from West Asia | Supply disrupted — domestic prices pressured |
| Fertiliser Imports | 30-35% of global urea from Gulf | Bulk carriers stranded in Persian Gulf |
India's Response
The government moved on multiple fronts. Commerce Minister Piyush Goyal announced support for exporters including insurance cover for damage, loss or excessive delays linked to the Red Sea or Strait of Hormuz. The government approved ECLGS 5.0 — an emergency credit line for MSMEs, industries and the aviation sector — providing an additional credit flow of Rs 2.55 lakh crore to help businesses manage the working capital strain from the conflict.
On the diplomatic front, India engaged with Gulf capitals, the US and Iran directly to press for safe passage for commercial vessels. The Ministry of External Affairs tracked Indian ships stranded in the Gulf and confirmed their status publicly. India used its standing in international forums to call for freedom of navigation and protection of commercial shipping.
India's overall export performance remained strong despite the West Asia fall — total merchandise exports hit USD 43.56 billion in April 2026, up 13.78 percent year on year. This means exporters diversified quickly — finding buyers in the US, Europe and Southeast Asia to partially offset the Gulf market disruption.
Where Things Stand Now
The US-Iran MoU signed on June 17 2026 provided for a ceasefire and the reopening of the Strait. Since then 11 India-bound vessels have successfully transited. But as of June 29, Iran is still asserting control over the Strait and issuing conditions for transit. The situation has improved but has not fully normalised.
For Indian exporters with Gulf buyers, the practical advice is straightforward. Do not assume West Asia trade has returned to pre-February 2026 conditions. Shipping insurance costs remain elevated. Transit times are uncertain. Buyers in the Gulf are managing their own inventory and logistics disruptions. Rebuild those export relationships carefully over the next two to three months as the diplomatic situation stabilises — but build contingency time into every shipment schedule until it does.
→ Hormuz Crisis June 2026 — India Trade Impact
→ ECGC Export Credit Insurance 2026 — Complete Guide
→ US Section 301 Tariffs 2026 — Impact on Indian Exporters
→ India April 2026 Exports Surge 13.78% to USD 43.56 Billion
📌 Source: Ministry of Commerce and Industry | PIB | The Prayas India | UNDP | IndiaStat | May 2026