As geopolitical tensions escalate in areas such as Israel and Iran, Indian exporters and international business professionals must navigate these challenges with prudence and strategic insight. With at least 14 significant Indian companies having direct or indirect connections to Israel, the current conflict may affect various sectors differently. Key companies involved include Adani Ports, Sun Pharmaceutical, TCS, and Dr. Reddy’s, among others. To protect their operations and ensure supply chain integrity, businesses need to implement carefully devised strategies and pre -cautionary measures.
Key Data and Industry Impacts
According to a report by the Ministry of Commerce, India’s exports to Israel totaled approximately $4.4 billion in FY2022-23, with key sectors including pharmaceuticals, technology, and logistics. The conflict has already started to influence businesses. Adani Ports, for example, holds a significant stake in the Haifa Port, one of Israel’s busiest. Amid rising instability, Adani Ports’ shares fell by 2.5% on the Bombay Stock Exchange (BSE), highlighting the direct financial impact on businesses with strong connections to the region.
Expert Strategies for Exporters and International Business Professionals
1. Prioritize Payment Security : One of the immediate challenges for exporters during conflict is payment uncertainty. In times like these, advance payments or irrevocable letters of credit should be mandatory for any new orders. This ensures liquidity and reduces exposure to financial risk. For example, a leading pharmaceutical exporter to Israel recently adopted a strict advance payment policy, reducing potential payment defaults amid the conflict.
2. Monitor Shipments and Ports : Real-time monitoring of shipments is crucial. Freight forwarders should be kept in close communication to ensure goods in transit face minimal disruptions. Ports like Haifa may face significant operational slowdowns or even temporary closures. Diversifying logistics by considering alternative routes via safer regions or neighboring countries can help minimize delays. In the case of Adani Ports’ operations at Haifa, logistics teams are already coordinating with alternative ports in neighboring regions to maintain supply chains.
3. Rethink Order Sizes and Frequency: Exporters should consider adjusting the size and frequency of shipments to conflict-affected regions. Smaller, more frequent shipments reduce the risk of large-scale disruptions, while still keeping the flow of goods steady. Sun Pharmaceutical, for instance, reduced the volume of its Israel-bound shipments and spread them over smaller batches to ensure they meet demand without exposing large inventories to risk.
4. Insure Against Risks: Exporters must revisit their insurance policies to ensure coverage against war or conflict-related disruptions. Many companies, particularly those in high-risk zones, have been quick to enhance their insurance portfolios to cover potential losses in these situations. Adani Ports and Sun Pharmaceutical have both increased their insurance coverage for assets in Israel, including shipments in transit, safeguarding against possible disruptions.
5. Focus on Inventory and Warehousing Strategies : Warehouses located in or near conflict zones pose an additional risk. Businesses must reassess their inventory management and consider relocating stock to safer zones or neighbouring countries. Sun Pharmaceutical maintains a warehousing strategy that splits inventory between multiple locations, ensuring that one is always secure in case of disruption.
6. Ensure Warehouse Security and Freight Management : In conflict zones, warehouse security is of paramount importance. Enhanced security protocols should be put in place to safeguard high-value inventories. Freight forwarding agencies can be instructed to ensure warehouse monitoring, as well as a clear evacuation plan if necessary.
7. Adapt to Rising Oil Prices and Market Volatility : One of the less obvious consequences of conflict is the ripple effect on global oil prices. Brent crude futures have already risen by over 1% amid the growing unrest, which could significantly impact sectors dependent on crude oil, such as manufacturing. The rise in oil prices is already affecting Indian exporters of petroleum products and petrochemical-based goods. Asian Paints, for example, has seen shares drop by 3-4% due to rising input costs linked to crude oil.
Concluding Remarks: In today’s volatile global environment, Indian exporters must remain agile, proactive, and well-prepared to handle sudden geopolitical disruptions. From prioritizing advance payments to reviewing shipping routes and warehousing security, businesses need to employ a broad range of strategies to ensure continued operations. By learning from live examples and leveraging the expertise of freight forwarders, logistics professionals, and insurance partners, exporters can navigate these challenging times while minimizing risk and ensuring long-term business stability.
As a Senior Logistician and Shipping Professional, I strongly advise Indian exporters and businesses involved in international trade to take these practical steps seriously, ensuring the safety and continuity of their operations in conflict-affected regions.
– Samir J Shah – 45 years of Expertise in Shipping and Logistics I Advisor in Customs, International Business, Freight Forwarding, and Logistics I Concerned and Sensitive Educator I TEDx Speaker I Author I Policy Maker.
