The US naval blockade of the Strait of Hormuz, announced by President Donald Trump on Sunday following the failure of peace talks with Iran, may lead to double trouble for Indian exporters if it creates a new layer of restrictions leading to further disruptions.
While the industry is already feeling the squeeze of rising costs of raw materials, spiralling freight rates and a looming energy crisis due to Iran’s blockade of the strait, much of the added anxiety stems from the lack of clarity regarding the scope of the US move, say experts.
Bullish outlook
Despite these complexities, the Indian government maintains a long-term bullish outlook. Responding to a question from businessline on whether India’s exports will grow in FY27 given the on-going war and regional volatility, Commerce Minister Piyush Goyal remained confident. “We will grow because now we have many more free trade Agreements (FTAs) that are coming into play,” Goyal said, suggesting that new trade frameworks, with partners like the US, the EU, the EFTA bloc and Oman, will provide the resilience needed to navigate the current geopolitical storm.
Meanwhile, exporters are concerned that this sudden escalation would effectively neutralise earlier hopes of a diplomatic breakthrough that might have provided Indian trade routes with much-needed leeway.
“We need to see exactly how the US blockade works. Any extra blockade would be very bad for Indian exporters as we were finally hoping that we had some leeway (with Iran), and that would now disappear,” said Sanjay Jain, CMD, TT India Ltd.
Jain said there was a “360 degree” impact of the escalating crisis on the entire textiles and clothing industry, with supply chains getting choked and not just prices, but availability also becoming a challenge.
Over $60 billion of exports from India, including key commodities like tea, agro-products, and engineering goods, annually destined for Gulf economies rely on Hormuz-linked shipping lanes. Additionally, the blockade also affects India’s shipments to its top destinations, the US and the EU, as it forces re-routing leading to higher shipping (in some cases a 400 per cent rise) and insurance costs and much longer transit time through the Cape of Good Hope.
Shortage of energy and petroleum-based inputs is also crippling production in various export units spread across the country.
India’s exports in April-February 2025-26 posted a small growth of 1.84 per cent to $402.93 billion (year-on-year), while exports in February 2026 marginally declined.
Adverse impact
Trump’s proposed blockade of the Strait of Hormuz may have a further adverse impact on both prices and availability of petrochemical-based components used by the leather and footwear sector, one of the worst affected by the West Asia crisis, said Israr Ahmed, a Chennai-based top exporter of leather products. “Demand of final product is also at risk as inflation rises. We may see demand dropping in the next few months,” Ahmed said.
There is a fear now that all movements from all countries in the Gulf of Hormuz will stop and energy shortage will hit engineering goods manufacturers even more, said Pankaj Chadha, Chairman, Engineering Exports Promotion Council of India. “All derivatives of oil including furnace oil, cutting oils, and rust prevention oils (important for manufacturing) are up 50 per cent already,” Chadha said, adding that it may get worse.
While exporters fear the worst, much depends on what Trump would do next, said Biswajit Dhar, former Professor, Jawaharlal Nehru University.
“He is saying he would block Iran’s ports, but is silent on what he wants to do to vessels from other countries passing through Hormuz. We’ll have to wait until he carries out his threat,” Dhar said.
(With inputs from TE Raja Simhan)
Published on April 13, 2026