What Happened
- The Commerce Secretary announced that all arms of the government are working to limit the impact of the West Asia war on India's exports, with a particular focus on resolving the LPG supply crisis through import diversification.
- India's merchandise exports dipped marginally by 0.81% year-on-year to $36.61 billion in February 2026, with exporters facing delayed shipments, fivefold increase in freight costs, and surging war-risk insurance premiums.
- The government announced a Rs 497 crore RELIEF (Resilience & Logistics Intervention for Export Facilitation) package to support exporters hit by the conflict.
- LPG diversification is underway, with a contract to import 2.2 million tonnes of LPG from the US Gulf Coast already in place, alongside exploration of suppliers from Russia, Canada, and Australia.
Static Topic Bridges
India's LPG Import Dependency and the Hormuz Vulnerability
India is one of the world's largest consumers of liquefied petroleum gas (LPG), with domestic consumption significantly exceeding domestic production. Unlike crude oil, where India has diversified to approximately 40 source countries, virtually all of India's LPG imports come from the Middle East — primarily Qatar, Saudi Arabia, UAE, and Kuwait — and transit through the Strait of Hormuz. This makes LPG the most acutely vulnerable energy product in India's import basket during the current crisis.
- India's annual LPG consumption: approximately 30 million tonnes (2024-25)
- Domestic LPG production: approximately 13-14 million tonnes; import dependence: ~50-55%
- PM Ujjwala Yojana (launched May 2016): provided free LPG connections to over 10 crore BPL households, dramatically increasing LPG demand
- LPG subsidy: transferred via Direct Benefit Transfer (DBT) to Jan Dhan accounts since 2015 (PAHAL scheme)
- India's total LPG connections: over 32 crore (households)
- Key LPG suppliers: Qatar (~40% of imports), Saudi Arabia, UAE, Kuwait — all Hormuz-dependent
Connection to this news: The government's urgent move to diversify LPG imports to the US Gulf Coast, Russia, Canada, and Australia addresses the single-largest energy vulnerability exposed by the Hormuz disruption — a vulnerability created by the rapid expansion of LPG consumption under the Ujjwala scheme without corresponding diversification of supply sources.
Impact on India's Foreign Trade — Freight Costs and Supply Chain Disruptions
The West Asia conflict has caused severe disruptions to India's trade logistics. Approximately 45,000 Indian containers were reportedly stuck in transit as of early March 2026, with container freight rates on the Asia-West Asia route surging from $1,200-$1,800 per forty-foot equivalent unit (FEU) to $3,500-$4,500 — nearly a threefold increase. War-risk insurance premiums for vessels transiting the Gulf have spiked, adding to landed costs.
- India's merchandise exports (2024-25): approximately $437 billion
- Exports to West Asia/GCC region: approximately $40-45 billion annually (~10% of total)
- India's imports from West Asia: dominated by crude oil, LNG, LPG — approximately $100-110 billion
- Key affected export sectors: basmati rice, gems and jewellery, textiles, petroleum products, chemicals
- Rs 497 crore RELIEF package: covers freight subsidy, insurance support, and logistics facilitation for affected exporters
- Previous similar interventions: Interest Equalisation Scheme for pre- and post-shipment credit; Transport and Marketing Assistance (TMA) for agricultural exports
Connection to this news: The government's RELIEF package and LPG diversification strategy represent a two-pronged approach — short-term financial support for affected exporters and medium-term structural changes to reduce supply chain vulnerability to Gulf disruptions.
India's Export Promotion Framework
India's export promotion ecosystem involves multiple institutional mechanisms working under the Ministry of Commerce and Industry. The Director General of Foreign Trade (DGFT) formulates and implements the Foreign Trade Policy (FTP), while sector-specific export promotion councils (EPCs) provide industry-level support. The current FTP 2023 (effective April 2023, replacing the five-year cycle with a dynamic, responsive framework) emphasises export diversification, logistics cost reduction, and digital facilitation.
- Foreign Trade Policy 2023: India's first open-ended FTP (no fixed tenure); replaced the five-year FTP cycle
- Key FTP 2023 initiatives: Advance Authorisation, EPCG (Export Promotion Capital Goods), RoDTEP (Remission of Duties and Taxes on Exported Products)
- DGFT: Apex body for foreign trade regulation under the Foreign Trade (Development & Regulation) Act, 1992
- Special Economic Zones (SEZs): governed by SEZ Act, 2005 — now rebranded as Development of Enterprise and Service Hubs (DESH) under proposed reforms
- National Logistics Policy (2022): targets reducing logistics costs from 13-14% to 8% of GDP
Connection to this news: The RELIEF package builds on India's existing export support architecture, with the Commerce Secretary's intervention signalling that the crisis-response mechanism is being activated within the FTP framework to address an unprecedented logistics disruption.
Key Facts & Data
- India's merchandise exports (Feb 2026): $36.61 billion (down 0.81% YoY)
- RELIEF package for exporters: Rs 497 crore
- Container freight surge: from $1,200-$1,800 to $3,500-$4,500 per FEU (~3x increase)
- Approximately 45,000 Indian containers stuck in transit (as of early March 2026)
- LPG diversification contract: 2.2 million tonnes from US Gulf Coast
- India's LPG consumption: ~30 million tonnes/year; import dependence: ~50-55%
- PM Ujjwala Yojana: over 10 crore BPL connections since 2016
- India imports LPG primarily from Qatar (~40%), Saudi Arabia, UAE, Kuwait