West Asia tension: India's edible oil and fertiliser trade to face severe disruption

Industry bodies have warned of disruptions in imports including edible sunflower oil and fertiliser as well as exports of agricultural commodities to the Middle East and Europe.

New Delhi: The escalating West Asia tension would lead to disruptions in India's imports as well as exports with shipping companies already beginning to impose emergency conflict surcharges on cargo moving through the Middle East.

The industry bodies have warned that there would be disruptions in India's import including edible sunflower oil and fertilisers, and exports of agricultural commodities to the Middle East and Europe could also get hit.

Shipping companies have already begun imposing emergency conflict surcharges on cargo moving through the Middle East, with French container giant CMA CGM levying between $ 2,000 and $ 4,000 per container, raising costs for importers.

"As the conflict continues, the risk also increases and shipping companies may impose insurance surcharges, making imports costlier," Soluble Fertilizer Industry Association(SFIA) President Rajib Chakraborty said.

"The closure of so many ports will lead to congestion and a shortage of containers," he added.

Chakraborty flagged concerns over supplies of sulphur and sulphuric acid, critical inputs for producing DAP and SSP fertilisers ahead of India's kharif sowing season beginning in June.

Qatar, the UAE and Oman collectively account for 76 per cent of India's sulphur imports.

India imports around 16 million tonnes of edible oil annually, of which sunflower oil accounts for roughly 20 per cent, sourced primarily from Russia, Ukraine and Argentina. Shipments could face delays if vessels are forced to reroute away from the Red Sea.

"So far there has been no impact. But if the conflict continues, supply of sunflower oil could be disrupted as shipments have to take a detour," Solvent Extractors' Association of India (SEA) Executive Director B V Mehta said.

The Indian Vegetable Oil Producers' Association (IVPA) warned that any US-Iran escalation sends direct ripple effects through India's crude and edible oil markets.

"In the near term, we expect volatility to persist both in oil and in dollar/rupee prices, with central focus on these geopolitical tensions," IVPA said.

On the export side, India ships 20 per cent of its oilmeal exports to the Middle East and 15 per cent to Europe. Officials said shipments of oilmeal, and agriculture, horticulture, and floriculture products transiting the region were also at risk.

In a communication to the civil aviation ministry, Apparel Export Promotion Council (AEPC) urged the Centre to waive demurrage charges on export cargo at airports, as flight disruptions arising from ongoing West Asian crisis may impact movement of consignments.