India’s export story has grown in scale and ambition. Crossing nearly $800 billion in exports this year is not a small milestone. India has signed several trade agreements over the past few years, now totalling nine, which cover approximately 38 countries. The UAE and Australia deals are already up and running; the UK one is done, and talks with the EU are still ongoing. So market access is no longer the constraint it once was. For a long time, that was the harder part. It is now largely in place.
What has quietly held this progress together, however, is the assumption that once markets are opened, goods will continue to move predictably. That assumption is beginning to weaken.
Disruptions in West Asia are beginning to show up in tangible ways. Rerouting away from the Red Sea is adding 10-15 days to transit times, while freight and insurance costs have risen sharply. For exporters, the bigger challenge is not just higher costs but the growing difficulty in committing to delivery timelines. In healthcare, the impact is already significant, with an estimated Rs 2,500- Rs 5,000 crore increase in costs driven largely by transport and input expenses. Surcharges of $4,000-$8,000 per shipment have become quite common now. The problem is, most exporters can’t easily pass these costs on, so the pressure dilutes their margins. At the same time, planning shipments has become a lot less predictable than it used to be. This is already visible across sectors. Buyers are building in buffers or delaying decisions. For businesses operating on tight margins, even modest increases in logistics costs can shift competitiveness.
In pharmaceuticals and preventive healthcare, the pressure is more layered. India exported over $30 billion worth of medicines last year; however, a significant share of key inputs, including APIs, continues to be imported, particularly from China. This creates a clear dependency at both ends. If inputs don’t arrive on time, production gets pushed back. And when outbound routes are disrupted, finished products can’t move as planned. What starts as a logistics delay doesn’t stay limited to transport; it begins to affect manufacturing timelines and, in regulated markets, even compliance. In sectors like pharmaceuticals, where timing is tightly controlled, these delays can have consequences well beyond just late deliveries.
A large share of India’s exports still moves through a limited set of routes and logistics hubs. That concentration works in stable conditions, but leaves little room to adjust when disruptions occur. Smaller exporters feel this first. They don’t really have the cushion to absorb sudden cost increases, so they either absorb the hit or hold back on shipments. So, they either take a hit on their topline or bottom line.
India has built an export system that performs efficiently under stable conditions, but not one that adjusts easily when those conditions change. This gap becomes clear in the way trade routes are currently used. For most exporters, routes are something you stick to unless there is a problem. And when that problem shows up, alternatives are usually explored at that point, often when it’s already too late. There isn’t advanced thinking around which sectors depend on which routes, or what realistic options exist if those routes are disrupted. As a result, decisions end up being made under pressure, when both costs and timelines are already working against you.
The pressure only builds when the logistics system itself is stretched. Urgent shipments like medicines don’t really get treated any differently; they’re waiting alongside bulk cargo for the same space. The delays that follow aren’t always about infrastructure falling short. More often, it’s because the system doesn’t shift gears when the situation demands it.
An equally important issue lies in how risk is distributed. When freight costs rise or insurance premiums increase, exporters are usually the first to absorb the impact, even though these are outside their control. Over time, this has concentrated volatility at the weakest end of the chain. Contracts will need to evolve to reflect a more balanced arrangement, where pricing and delivery terms adjust when disruptions occur. Without that shift, exporters will continue to operate under pressure each time the system is strained.
In pharmaceuticals and preventive healthcare, resilience will depend on building flexibility into sourcing. Domestic API capacity will take time to scale. Until then, alternate sourcing and manufacturing arrangements across geographies can help reduce the risk of production being disrupted when one link in the chain is affected.
Financial response is another area where the gap becomes clear. Exporters face immediate cost pressures, but access to additional working capital often lags. This mismatch can turn short-term disruptions into longer-term strain. Aligning financial support more closely with the timing of disruptions would help ease that pressure.
Trade agreements, too, will need to reflect this reality. Tariff access remains important, but in a more uncertain environment, continuity matters just as much. Provisions that support faster clearances, recognise alternate routing, and improve coordination across systems can strengthen trade in ways that go beyond cost advantages.
India still tends to assume that once an order is ready, it will move smoothly from origin to destination, but that’s no longer always the case. The system, in many ways, is still built around that old assumption. The West Asia crisis is a signal. In a world where disruption is becoming routine, competitiveness will be defined not just by how much a country can export, but by whether it can keep exporting when conditions deteriorate. India has built scale. The next step is to ensure that this scale can hold under stress.
