Rs 25,060-crore Export Promotion Mission to provide credit guarantees and interest support to small exporters amid rising freight and insurance costs due to escalating Iran–Israel conflict
India has issued credit support for small exporters operating through global ecommerce platforms under the Rs 25,060-crore Export Promotion Mission, with the move coming as tensions in West Asia raise concerns over disruptions to key maritime trade routes.
The scheme is aimed at improving access to working capital for micro, small and medium enterprises (MSMEs) participating in cross-border digital trade, allowing them to finance production, inventory and overseas fulfilment operations, according to the issued statement.
Guidelines issued by the Directorate General of Foreign Trade said exporters with at least six months of export activity through postal or courier channels, and with inventory stored in overseas warehouses to serve international online orders, will be eligible to apply for financing support.
“Support shall be available to the exporters as per eligibility… Proven track record of at least six months in exporting through postal or courier; current inventory placed in overseas warehouses for ecommerce export fulfilment; and current stock placed in warehouses set up under ecommerce export hub facility,” the DGFT said in a trade notice.
Credit Support Framework For Ecommerce Exporters
The programme includes interest subvention and partial credit guarantees for banks that provide working capital to exporters, according to the guidelines. The facility is intended to improve access to credit for MSMEs participating in global value chains through digital commerce.
Banks extending financial assistance through facilities such as cash credit, overdrafts and other working-capital instruments will receive credit-guarantee cover under the framework.
The initiative will initially be rolled out on a pilot basis through the Export-Import Bank of India (Exim Bank), with guarantees backed by the National Credit Guarantee Trustee Company (NCGTC).
New firms entering cross-border ecommerce may also qualify if they have at least one year of consistent domestic online sales experience, the DGFT said.
West Asia Tensions Raise Shipping And Logistics Risks
The policy comes at a time when escalating hostilities between Israel and Iran are raising concerns about disruptions to shipping through the Red Sea and the Strait of Hormuz, two of the world’s most critical maritime trade corridors. As just on the logistics side, nearly 65 per cent of India’s crude oil imports are estimated to move through the Suez or Red Sea route, and about 30 per cent of India’s exports to Europe and North Africa use the Red Sea corridor, making the shipping lanes strategically important for trade flows.
Exporters warn that any sustained disruption could force vessels to divert around the Cape of Good Hope, significantly increasing shipping times and logistics costs.
Federation of Indian Export Organisations (FIEO) President S.C. Ralhan said that any prolonged disruption on these routes could force vessels to go via the Cape of Good Hope, adding 15–20 days to Europe- and US-bound shipments and sharply pushing up freight and marine insurance costs.
“The impact will certainly be observed, both directly and indirectly. Heightened geopolitical tensions and uncertainty are likely to weigh on overall market sentiment, while logistics challenges such as rising freight rates and longer transit times could disrupt supply chains. Additionally, apparel exports to key Middle East markets may experience some pressure as trade flows adjust to the evolving situation,” said Rahul Mehta, Chief Mentor, Clothing Manufacturers Association of India (CMAI).
Additionally, according to Kotak Institutional Equities, prolonged tensions involving Iran could put pressure on corporate earnings in India, particularly because the country’s reliance on imported crude oil makes companies sensitive to increases in global oil and gas prices. The report noted that transport, logistics and industries heavily reliant on imported fuel face a higher likelihood of margin compression, while firms with lower energy dependence may experience less impact.
Companies in the manufacturing and chemical sectors could also see costs increase if energy prices remain elevated for an extended period, potentially raising operational expenses across supply chains.
Delivery Delays And Cash-flow Pressures For Online Exporters
For exporters relying on online marketplaces, the disruption is particularly acute. Cross-border ecommerce businesses typically operate on thin margins and depend on predictable delivery timelines to maintain marketplace ratings and customer trust. Longer transit times and higher shipping costs can strain cash flows by delaying payments and forcing companies to hold larger inventories abroad, according to Kotak Institutional Equities.
In that context, government-backed credit support could help exporters finance costlier logistics, maintain safety stocks in overseas warehouses and manage delayed receivables without cutting back on orders.
India’s Trade Exposure To West Asia
The policy arrives at a sensitive moment for India’s trade flows. A large share of the country’s westbound exports to Europe and other Western markets moves through the Red Sea–Suez corridor, while a significant portion of crude oil imports passes through the Strait of Hormuz.
Trade data highlight the exposure. India exported about USD 1.24 billion worth of goods to Iran in the fiscal year ending March 2025, dominated by basmati rice, bananas, soya meal, pulses and tea, while exports to Israel were around USD 2.1 billion and imports about USD 1.6 billion.
Beyond bilateral trade, India’s broader commerce with West Asia is significantly larger. Exports to regional economies such as Iraq, Jordan, Lebanon, Syria and Yemen are estimated at about USD 8.6 billion annually, while imports from these markets are about USD 33.1 billion.
