Indian Exporters Offered Extended Lifeline as Gulf War-Risk Premiums Remain Volatile

The Indian Ministry of Commerce and Industry has officially extended its Resilience and Logistics Intervention for Export Facilitation (RELIEF) scheme until March 31, 2027. Designed to shield domestic exporters from the debilitating costs of geopolitical instability in West Asia, the program offers a critical safety net for businesses navigating one of the world’s most perilous maritime trade corridors.

Stabilizing Trade Amidst Maritime Volatility

The RELIEF program, administered by ECGC Ltd under the Export Promotion Mission, was established in March 2026 to combat the surge in freight rates and war-risk premiums linked to the escalating conflict near the Strait of Hormuz. With war-risk premiums for vessels transiting these waters currently hovering between 7.5% and 10% of hull value—a dramatic jump from the historical 1% to 3% range—the scheme provides much-needed relief to traders shipping to key markets including the UAE, Saudi Arabia, Kuwait, and Israel.

The program is structured across three components to address varying levels of exposure. While Component II extends credit risk cover up to 95%—a significant improvement over the standard 80% to 90% typically offered by ECGC—the government is increasingly focused on the most vulnerable segment of the trade ecosystem: the micro, small, and medium enterprises (MSMEs).

Unclaimed Relief for Small-Scale Exporters

A significant portion of the scheme’s ₹497 crore total allocation, specifically ₹282 crore, is ring-fenced under Component III. This portion is strictly reserved for MSME exporters who lacked commercial ECGC insurance coverage during the peak disruption period. These businesses are eligible to claim a reimbursement of up to 50% of their additional insurance and freight costs, capped at ₹50 lakh per exporter.

Industry observers note that many eligible smaller firms may remain unaware of this available capital. As the scheme remains active through March 2027, the government is encouraging exporters to utilize the ECGC’s real-time dashboard to verify their eligibility and track potential claims. For insurance brokers, this presents an urgent advisory opportunity: ensuring that MSME clients who previously assumed their lack of formal coverage precluded them from assistance are now made aware of this government-backed window.

Shifting Strategies in a Restrictive Market

The persistent nature of the maritime crisis has forced a strategic shift in how Indian exporters conduct business. Insurance experts point out that while coverage remains available, it is frequently offered on restrictive terms that threaten the viability of shipping contracts.

To mitigate these pressures, some trade bodies, such as the Indian Rice Exporters Federation, have advised members to pivot away from Cost, Insurance, and Freight (CIF) contracts. By shifting to Free on Board (FOB) terms, the obligation to secure and pay for insurance shifts to the buyer. While this tactic successfully reduces the immediate financial burden on the exporter, experts warn that it does not eliminate the inherent risks of regional trade.

As the March 2027 deadline approaches, the RELIEF scheme remains the primary line of defense for Indian exporters. Whether through direct utilization of the Component III reimbursement fund or by navigating the complexities of heightened war-risk premiums, businesses must remain agile to survive the current economic climate in the Gulf maritime corridor.

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