Pharma exporters brace for Rs 5,000-crore hit as US-Iran war drives up freight costs
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Exporters face steep surcharge of $4,000–$8,000 per shipment, driving up logistics costs for drugmakers heavily dependent on the Gulf and the wider West Asia market
- Pharma exports to West Asia disrupted, risking Rs.2,500–5,000 crore
- Freight charges double, increasing drugmakers’ logistics costs
- Gulf markets depend on Indian generics; council requests government aid
A total stop to pharma shipments to West Asia this month alone can drain Rs 2,500–Rs 5,000 crore of export value, the Pharmaceuticals Export Promotion Council of India (Pharmexcil) has warned, as freight rates double amid a worsening war between the US-Israel and Iran.
Exporters face steep surcharges of $4,000–$8,000 a shipment, driving up logistics costs for drugmakers heavily dependent on the Gulf and the wider West Asia market. Heftier insurance premiums, fuel spikes and operational delays from longer routes are the primary reasons for the spike.
The region accounts for more than 5.5 percent of India’s pharma exports at around $30 billion.
According to Pharmexcil chairman Namit Joshi, higher crude prices and unpredictable transit times are also feeding into active pharmaceutical ingredient (API) procurement costs and inventory distortions, stretching working capital cycles across both large and mid‑sized pharma exporters.
Joshi said logistics pressures are mounting at a pace not seen since the pandemic-era disruptions.
Since February 28, when the US and Israel attacked Iran, the benchmark Brent has jumped nearly 16 percent. On March 6 morning, Brent was trading close to $84 a barrel, rising from $72.48 on February 28.
The war has disrupted critical shipping corridor of the Strait of Hormuz, from where 50 percent of India’s oil and around 80 percent of natural gas flow through. The Red Sea and major Gulf channels essential for timely delivery of medicines, active pharmaceutical ingredients (APIs) and temperature‑sensitive formulations, have also been hit.
Rerouting or delays on these routes could severely affect delivery schedules and compromise cold‑chain integrity, particularly for high‑value and time‑critical pharmaceutical cargo, Joshi said.
The Middle East — especially the Gulf Cooperation Council (GCC) and wider West Asia and North Africa region—has emerged as an important destination for India’s drug industry, with exports rising from $1.32 billion in FY21 to $1.75 billion in FY25, data from Pharmexcil shows.
Key markets including the UAE, Saudi Arabia, Oman and Kuwait rely heavily on Indian generics and affordable medicines, positioning India as a lifeline supplier across the region.
The council said it is closely monitoring the situation and is in talks with logistics and trade partners to explore mitigation measures. It has urged greater government support, including freight‑relief mechanisms and diversification of shipping routes, to ensure uninterrupted access to essential medicines in West Asia.
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