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business1d ago
How the Hormuz Strait crisis is squeezing India's SMEs
- The Hormuz Strait crisis disrupts trade and fuels costs for India, with SMEs in Kerala and Gujarat most exposed due to margins of 5–8%.
- New reference confirms that India’s Middle East trade share (exports ~15%, imports ~20%) amplifies vulnerability to Hormuz disruptions.
- Spice exporters in Kerala report that shipments are delayed and payments uncertain as demand from the Gulf slows.
- Containers are stranded at hubs like Khorfakkan and Sohar, delaying deliveries to Gulf markets and increasing costs.
- The government has offered limited relief, but widespread tools to hedge freight costs and backstop credit remain scarce.
- Longer-term risk includes losing Gulf and European buyers to alternatives in Vietnam, Turkey, and Bangladesh.
- Kerala exporters, including around Kochi, face material exposure with several hundred exporters already affected.
- Industrial clusters in Morbi (ceramics) and Surat (textiles) see freight rate surges eroding margins.
- Shah highlights liquidity crunch from delayed shipments as working capital relies on export receivables.
- Experts urge route diversification, energy diversification, and stronger financial buffers to shield small exporters from shocks.
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