The government will be formalising some measures using the components of the Export Promotion Mission (EPM) and other policy tools to give comfort to exporters that are facing problems due to the conflict in West Asia, Commerce and Industry Minister Piyush Goyal said Friday.
“Every day the inter-ministerial group talks to the exporters. Even this morning they must have had an engagement. They take feedback and we will not be found wanting in supporting our exporters in any way,” the minister told reporters on the sidelines of vice chancellors’ conclave organised by Indian Institute of Foreign Trade.
After the start of the conflict on February 28, the exporters are facing numerous issues regarding sending out products. The shipments to West Asia are stuck as the Strait of Hormuz is closed and other port facilities in the region have come under attack. Apart from the destination, West Asia ports are also used for transshipment facilities and routes through the region are the shortest in reaching US, Europe and Africa.
Logistics Logjam
According to reports approximately 147 container vessels are currently idling in the region. Roughly 105 are stuck inside the Persian Gulf, while the rest are waiting near the Gulf of Oman with no clear instructions on where to discharge.
Major sea carriers have declared End of Voyage and offloaded cargoes at nearest safe ports like Port of Salalah in Oman, Jeddah and King Abdullah Port in Saudi Arabia and Colombo.
The secondary shock has hit Southeast Asian and European hubs as schedules become completely unpredictable. The cargoes to the key markets of US and Europe are being loaded that will pass through the Cape of Good Hope, increasing travel times by 14-21 days and higher freight charges.
As the conflict rages, the major shipping lines have put an additional contingency charge on goods in the region. The surcharge ranges from $ 2000 to $ 4000 per 40-feet container. Indian exporters say that they are being asked to pay the surcharge even on goods that had reached West Asian ports before February 28 and were waiting to offload their merchandise.
“We are in dialogue with the Ministry of Shipping and with all the shipping companies also. And I do hope we will find resolution to this issue also. We should continue to meet all the commitments that we have made to our buyers, whether in goods or services,” Goyal said.
“The government stands with our industry and will continue to ensure that all our international commitments are met. Because that is what defines India,” he added.
Industry Demands
In view of the conflict. exporters are seeking higher RoDTEP (Remission of Duties and Taxes on Exported Products (RoDTEP) rates, urging the Export Credit Guarantee Corporation of India (ECGC) not to raise insurance premiums, ad hoc working-capital limits and credit extensions similar to measures provided during the COVID-19 pandemic.
They are asking for waiver of port-related charges, including storage and demurrage, in cases where cargo is rolled due to vessel cancellations or steep freight increases beyond exporters’ control. Further they have requested facilitation for cargo in transit to be returned, redirected or diverted, with support from customs authorities and the Reserve Bank of India for documentation and payment adjustments.