Escalating geopolitical tensions in West Asia are beginning to ripple through India’s pharmaceutical export ecosystem, with industry bodies warning of a significant hit to shipments as freight costs surge and shipping routes face disruption.

According to the Pharmaceuticals Export Promotion Council of India (Pharmexcil), a complete halt to pharmaceutical shipments to West Asia for even a single month could result in export losses ranging between Rs 2,500 crore and Rs 5,000 crore. The warning comes amid intensifying conflict involving the United States Israel and Iran, which has already pushed global oil prices higher and disrupted key maritime trade corridors.

The development underscores how geopolitical instability can quickly translate into operational and financial stress for export-oriented sectors such as pharmaceuticals. The council highlighted that logistics costs have surged sharply, with exporters now facing additional surcharges of $4,000 to $8,000 per shipment. These costs stem from higher insurance premiums, fuel price increases, and longer transit routes as shipping companies attempt to avoid conflict-prone areas.

The Strait of Hormuz, a critical maritime corridor through which nearly half of India’s crude oil imports and a significant share of natural gas flows, has been at the centre of these disruptions. Shipping activity through the Red Sea and several Gulf routes has also slowed as carriers reassess safety risks. These routes are essential for transporting finished medicines, active pharmaceutical ingredients (APIs), and temperature-sensitive pharmaceutical cargo.

Pharmexcil chairman Namit Joshi indicated that the logistics environment is becoming increasingly unpredictable, with exporters facing fluctuating freight rates and uncertain delivery schedules. According to the council, the pressure on logistics is rising at a pace reminiscent of pandemic-era supply chain disruptions.

The impact is not limited to transportation alone. Rising crude prices have pushed fuel costs higher, which in turn raises shipping and manufacturing expenses across the pharmaceutical value chain. Brent crude has climbed nearly 16 percent since February 28, when military strikes targeting Iran escalated the regional conflict. As of March 6, Brent was trading close to $84 per barrel compared with $72.48 at the end of February.

Higher oil prices typically feed directly into freight and packaging costs, both of which are critical for pharmaceutical exports that require strict regulatory and temperature-controlled logistics. Delays in shipping routes also increase the risk of cold-chain disruptions, particularly for high-value or biologic medicines.

Another emerging concern is the effect on raw material sourcing. Many Indian pharmaceutical manufacturers depend on imported active pharmaceutical ingredients or intermediates. Longer transit times and supply uncertainties could distort inventory planning and increase working capital requirements for exporters.

West Asia remains an important export market for India’s pharmaceutical industry. The region accounts for more than 5.5 percent of India’s total pharmaceutical exports, which are valued at roughly $30 billion globally. Demand from the Gulf Cooperation Council countries and the wider West Asia and North Africa region has been steadily rising over the past few years.

Industry data shows that Indian pharmaceutical exports to these markets increased from approximately $1.32 billion in FY21 to $1.75 billion in FY25. Countries such as the United Arab Emirates, Saudi Arabia, Oman and Kuwait rely heavily on Indian generic medicines and affordable drug formulations. This dependence positions Indian drugmakers as a critical supplier of essential medicines across the region.

For exporters, the immediate challenge is maintaining delivery schedules while managing escalating logistics costs. Pharmaceutical shipments often operate on tight timelines due to regulatory approvals, hospital procurement cycles and temperature-sensitive packaging requirements. Any disruption could lead to contract penalties or loss of market share to competitors.