The Indian government is actively looking into measures to assist domestic shipping firms and exporters facing increased insurance expenses because of the war-risk premium linked to the Iran conflict. Industry consultations led by Shipping Secretary T.K. Ramachandran and Department of Financial Services Secretary M. Nagaraju highlighted concerns raised by exporters and shipping companies regarding the surge in insurance costs, particularly for vessels navigating key maritime routes near West Asia. This rise in expenses, coupled with potential vessel rerouting to avoid conflict areas, is impacting logistics costs for Indian exporters.
The spike in insurance premiums is negatively impacting the competitiveness of Indian businesses in global markets, as heightened operational costs directly affect profit margins and pricing strategies. With a significant portion of India’s crude oil imports and shipments of LNG and LPG passing through the Strait of Hormuz, the ongoing conflict has disrupted this crucial Gulf chokepoint, leading to challenges for Indian companies.
Recent incidents in the Strait of Hormuz, including attacks on commercial ships and the US’s actions against Iranian mine-laying vessels, have further escalated tensions in the region. The US has taken steps to safeguard commercial vessels passing through the strait, aiming to prevent disruptions in oil supplies and stabilize global oil prices. Despite these security measures, the region remains volatile, impacting shipping operations and posing risks to maritime trade.
