India rolls out Rs 497-crore insurance scheme to shield exporters from West Asia disruptions

The intervention comes at a time when exporters, particularly micro, small and medium enterprises (MSMEs), are grappling with a spike in transportation costs, longer delivery timelines and heightened uncertainty around shipments routed through the Gulf region.

• Centre announces Rs 497-crore aid package for exporters amid crisis
• RELIEF scheme offers expanded insurance and freight cost support
• MSMEs to be reimbursed for higher freight and insurance costs

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The Centre, on March 19, unveiled a Rs 497-crore support package aimed at insulating Indian exporters from the fallout of escalating tensions in West Asia, with a sharp focus on mitigating rising logistics costs and expanding insurance cover.

The scheme, titled Resilience & Logistics Intervention for Export Facilitation (RELIEF), seeks to ensure continuity in trade flows as conflict-linked disruptions strain key shipping routes and inflate freight and risk premiums.

The intervention comes at a time when exporters, particularly micro, small and medium enterprises (MSMEs), are grappling with a spike in transportation costs, longer delivery timelines and heightened uncertainty around shipments routed through the Gulf region.

Strategic maritime corridors have seen disruptions, forcing rerouting and pushing up both transit times and insurance costs, thereby squeezing margins for exporters already operating in a competitive global environment.

At the core of the scheme is enhanced support through the Export Credit Guarantee Corporation (ECGC), which will provide expanded insurance coverage across the export cycle.

For shipments already insured during the peak disruption period, exporters will receive up to 100 percent risk coverage without any additional premium burden. For upcoming consignments, the scheme offers up to 95 percent coverage, aimed at encouraging exporters to continue servicing markets despite elevated geopolitical risks.

A significant portion of the outlay has been earmarked for MSMEs that do not have existing insurance cover.

These exporters will be eligible for reimbursement of up to 50 percent of the incremental freight and insurance costs incurred due to the crisis, subject to specified caps.

This component is expected to provide immediate relief to smaller firms that are more vulnerable to sudden cost escalations and disruptions in working capital cycles.

The scheme will cover exports to key markets in West Asia, including major trade partners such as the UAE and Saudi Arabia, which together account for a substantial share of India’s outbound shipments. Implementation will be routed through ECGC, which will handle claim verification and disbursement, ensuring quicker turnaround and targeted delivery of benefits.

The government notification said the objective is not just to offset immediate cost pressures but also to prevent order cancellations and protect India’s market share in the region.

With global insurers turning cautious on high-risk routes and shipping lines recalibrating operations, the government’s intervention is aimed at maintaining exporter confidence and stabilising trade volumes.

The move is part of a broader strategy to safeguard India’s export momentum, with tens of billions of dollars in trade exposed to potential disruption amid ongoing geopolitical tensions.

The government is also expected to closely monitor the situation and may consider additional measures if volatility in the region persists.