Amid West Asia war, FY26 goods exports may fall 2-3%: FIEO
India's goods exports may see a 7-8% drop in March due to the West Asia conflict. Full fiscal year 2026 exports could be 2-3% lower. However, overall goods and services exports are projected to rise 5-6% for FY26. Rising raw material prices and shipping costs are impacting shipments. Exporters seek government intervention on interest rates and policy simplification.
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Context
The expects India's FY26 goods exports to fall by 2-3% due to disruptions from the West Asia conflict, which has escalated shipping freight and insurance costs. To mitigate this impact, exporters are urging the government to lower interest rates, simplify the , and resolve refund delays caused by late filings.
UPSC Perspectives
Geopolitics & Economic
The ongoing conflict in West Asia has caused severe supply chain bottlenecks, directly impacting India's merchandise exports. The rerouting of ships to avoid conflict zones increases transit times, leading to a surge in shipping freight and insurance premiums. This makes Indian goods less price-competitive globally. From a UPSC perspective, this highlights India's vulnerability to global geopolitical shocks and underscores the need for resilient supply chains. Furthermore, the has noted that the cost of credit in India (around 8.25% after subsidies) is significantly higher than international standards (2-4%), further squeezing exporters' profit margins.
Governance
The is a crucial mechanism under India's Foreign Trade Policy (FTP) designed to boost manufacturing and exports. It allows exporters to import raw materials and inputs duty-free, provided these inputs are physically incorporated into the final export product. Exporters must fulfill a stipulated export obligation (adding minimum value and exporting the goods) within a specific timeframe. Exporters are currently demanding the simplification of the Advance Authorisation Redemption process—the final step where the closes the license after verifying that export obligations are met. Currently, nomenclature mismatches between the DGFT and Customs authorities delay this process and lock up working capital.
Regulatory
The is a mandatory declaration filed by carriers (like shipping lines or airlines) under the Customs Act, 1962, confirming that goods have physically departed from India. Exporters heavily depend on the timely filing of the EGM, as it acts as conclusive legal proof of export. Without a filed EGM, the ICEGATE system (Indian Customs portal) cannot process refunds or duty drawbacks (refunds of duties paid on imported inputs). The article points out that delays by shipping lines in filing the EGM are causing severe liquidity crunches for exporters, demonstrating the critical link between regulatory compliance turnaround times and export competitiveness.