These UP cities are feeling the pinch as West Asia conflict escalates

The joint US-Israel attack on Iran has triggered retaliatory strikes across the Middle East, including on countries hosting US military bases.

• Iran-Israel conflict endangers Agra, Moradabad exports
• Agra may lose 40 percent, Moradabad up to 70 percent of exports
• Higher costs and delays increase export risks

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The escalating conflict between Iran and Israel, with military involvement of the United States, is emerging as a serious threat to two of Uttar Pradesh’s most export dependent industrial clusters, Agra’s leather and footwear hub of Kanpur and Moradabad’s brass and handicraft industry.

Trade bodies have warned that if the conflict prolongs and shipping routes remain disrupted, Agra could lose up to 40 percent of its business this financial year, while Moradabad may face an even sharper contraction of nearly 70 percent.

Agra exports footwear and leather products worth around Rs 4,000 crore annually. Of this, trade worth Rs 250 crore to Rs 500 crore is directly linked to Israel and other Middle Eastern countries. The city’s high end leather shoes and industrial safety footwear have strong demand in Europe and West Asia, particularly in industrial and security sectors.

However, exporters say the conflict has increased risks along the Strait of Hormuz and the Red Sea corridor, two crucial maritime trade routes. “Shipping companies are expected to divert cargo vessels through the Cape of Good Hope in southern Africa to avoid the conflict zone. This longer route could add 30 to 50 days to delivery schedules and significantly inflate freight charges,” Sanjeev Singh, leather exporter based in Agra told Moneycontrol.

Rajendra Kumar Jalan, former chairman of the Council for Leather Exports, said the United Arab Emirates remains a large market and the immediate impact will largely be confined to exports to the Middle East. He said western Europe, Latin America and the United States markets remain open for now. However, if the war continues, rising input costs could affect pricing and competitiveness. He added that air freight costs have already increased, pushing up overall export expenses

Gopal Gupta, president of the Agra Footwear Manufacturers and Exporters Chamber, said the footwear industry was already struggling with the impact of a global slowdown. He said the Iran Israel conflict will destabilise the Middle East market and have a direct and negative impact on the MSME sector, which forms the backbone of Agra’s footwear industry.

Industry representatives estimate that transport costs may double if the diversion continues. At the same time, rising crude oil prices have pushed up the cost of chemicals and raw materials used in leather processing, further tightening margins. Exporters also fear delays in payment cycles due to sanctions on Iran and wartime conditions in Israel, which may complicate banking transactions and remittances.

Sanjay Goyal, president of the National Chamber of Industries and Commerce, said the industry is preparing for a possible 40 percent decline in turnover if the war continues for an extended period. He said smaller exporters are particularly vulnerable because they operate on thin margins and depend heavily on timely payments and steady order flows.

Apart from direct trade with West Asia, exporters are concerned that higher logistics costs will make Agra’s leather products less competitive globally. Countries such as China and Vietnam may gain price advantage if Indian exporters are forced to increase rates to offset rising freight and input expenses.

Moradabad brass and handicrafts at greater risk

In Moradabad, often referred to as the brass city, the situation appears even more precarious. The district exports brassware, metal handicrafts and decorative products worth Rs 8,000 crore to Rs 9,000 crore annually. Major markets include the United States, Japan and Middle Eastern countries. Around 2,400 exporters and thousands of artisans are directly linked to this ecosystem.

Exporters estimate that up to 70 percent of Moradabad’s brass and handicraft business could be affected if the conflict leads to prolonged shipping disruptions and order cancellations. Satpal, secretary of the Handicraft Exporters Association, said many exporters have secured orders at international trade fairs such as those in Frankfurt and Delhi. However, buyers are reportedly adopting a wait and watch approach amid geopolitical uncertainty. ”If the war between the United States, Israel and Iran does not end soon, factory operations may start shutting down in the coming days,” he said.

Vikas Agarwal, vice president of the Moradabad SEZ Exporters Association, said the handicraft business is highly sensitive and performs best when there is global stability. Even minor geopolitical disturbances tend to impact exports significantly. “Any disruption in shipping schedules, spike in freight charges or delay in payment settlements could result in cancellations and deferment of fresh orders,” he said.

Exporters also point out that the sector was already under strain from higher tariffs in some markets, increased raw material prices and a slowdown in demand in 2025. In several cases, shipments to the United States had already declined sharply over the past year. The fresh geopolitical tensions have added another layer of risk.

Naveed Ur Rehman, president of the Moradabad Handicrafts Exporters Association said that if the conflict persists beyond a few weeks, factories may be forced to cut production, affecting employment for hundreds of artisans and contract workers. “Many small units depend almost entirely on export orders and do not have a strong domestic market to cushion the impact,” he said.

Outlook hinges on duration of conflict

Exporters in both Agra and Moradabad said the next few days will be crucial in determining the scale of economic damage. If maritime trade routes remain operational and hostilities are contained, the impact may be temporary. However, a prolonged war involving Iran, Israel and the United States could significantly disrupt trade flows, raise input and logistics costs, and weaken order pipelines.

For Uttar Pradesh’s export driven leather and brass clusters, the conflict has introduced a new layer of uncertainty at a time when global demand is already fragile. Industry leaders say policy support, stable shipping operations and smoother banking channels will be critical to prevent a sharp contraction in export earnings and job losses in the months ahead.