Mumbai: Indian companies with significant exposure to West Asia, both as a market and as a trade route, are turning to legal and trade experts as they brace for potential fallout from the US-Israeli strike on Iran, which has raised tensions in the Middle East.
Companies in sectors such as energy, speciality chemicals and gems and jewellery that are major importers from Gulf countries will need to re-examine their strategies, as will outbound exports from India, said experts.
Sanjay Notani, partner and co-head of the international trade and customs practice at law firm Economic Laws Practice, said they are receiving queries from companies scrambling to invoke force majeure clauses and renegotiate contracts as well as rejig supply chains.
Goods sitting in warehouses and ports are facing demurrage, and with both shipping and air traffic disrupted, importers and exporters are caught in the same bind. This corridor is also a critical transit route for Indian imports from Eurasia, which compounds the pressure.
“The deeper problem is that these issues simply aren’t getting resolved. First Covid, followed by sanctions, then tariffs, now conflict in the Middle East. Resilience and compliance are easy to preach, but they come at an enormous cost,” said Notani. “And right now, the coordination between sales and finance teams, legal counsel, and other concerned stakeholders such as banks and insurance frankly needs consistent overhauling and close coordination,” he added.
The Gulf Cooperation Council (GCC) is India’s largest trading partner bloc, with bilateral trade of $178.56 billion in fiscal 2024-25 and accounting for 15.42% of the country’s global trade. Key exports from India include engineering goods, rice, textiles, machinery, gems and jewellery, while imports primarily comprise crude oil, LNG, petrochemicals, and precious metals such as gold.
“We are seeing a lot of uncertainty among parties to contracts for deliveries to or from the GCC region in particular,” said Anand Desai, managing partner of law firm DSK Legal. “The force majeure clauses in most contracts address this unfortunate situation, but the uncertainty of when the situation will resolve will result in many contracts standing or being terminated.” The firm recently opened its offices in Dubai and Abu Dhabi.
According to experts, consequential events arising from the situation could cause serious contractual disruptions.
“Whether such disruptions could be accommodated within the contracts as force majeure events or be enforced as performance obligations will depend upon the structure and nature of the contracts as well as the quantum of enforceable indemnities,” said Lokanath P Kar, founder of the law firm ElpeeCo.
Broking firm Emkay Global Financial Services said a sustained war would pose significant macro risks for India. However, it expects a relatively short conflict lasting a few days to a couple of weeks, given the imbalance between the two sides and the depletion of Iran’s leadership.
Rakesh Kumar, managing director of insurance broker Square Insurance, said many of his clients, especially exporters and logistics players, were reaching out to understand what would happen if shipments were delayed or routes disrupted.
