India Extends Export Risk Relief Scheme to March 2027 Amidst Persistent Gulf Maritime Tensions

The Indian government has officially extended its crucial export insurance support program, the Resilience and Logistics Intervention for Export Facilitation (RELIEF), until March 31, 2027. Administered by ECGC Ltd under the broader Export Promotion Mission, the scheme serves as a vital safety net for Indian businesses navigating the volatile maritime trade corridors of West Asia.

First introduced in early 2026, the program was designed to combat the crippling financial impact of surging war-risk premiums and freight costs following the escalation of conflicts near the Strait of Hormuz. With regional stability showing little sign of improvement, the extension provides a much-needed buffer for exporters operating in high-risk zones, including the UAE, Saudi Arabia, Kuwait, Israel, Qatar, Oman, Bahrain, Iraq, Iran, and Yemen.

A Three-Tiered Approach to Stability

The RELIEF program is structured into three specific components to address varying levels of business exposure. The primary focus of the recent extension—Component II—offers enhanced credit risk coverage. Qualifying new shipments to the Gulf region are now eligible for up to 95% credit risk cover, a significant increase over the standard ECGC threshold of 80% to 90%. By absorbing the additional premium costs and reimbursing ECGC for claims beyond standard limits, the government ensures that trade flows remain uninterrupted despite geopolitical threats.

The scheme also places a heavy emphasis on supporting the Micro, Small, and Medium Enterprises (MSME) sector. Component III, which accounts for a massive ₹282 crore of the total ₹497 crore allocation, is specifically reserved for smaller exporters who lacked formal commercial insurance during the initial onset of the crisis. These firms can seek reimbursement for up to 50% of their eligible additional freight and insurance costs, capped at a limit of ₹50 lakh per entity.

Navigating a Challenging Insurance Landscape

The necessity for the RELIEF program stems from an increasingly prohibitive shipping environment. Data from S&P Global indicates that war-risk premiums for vessels transiting critical bottlenecks have soared to between 7.5% and 10% of hull value. Furthermore, the cost of moving commodities like crude oil has skyrocketed, with freight rates currently hovering at four times their historical five-year average.

Insurance experts note that while coverage for these regions remains available, the terms have become increasingly restrictive and expensive. For many Indian exporters, the cost of insurance has shifted from being a minor operational expense to a primary commercial constraint that threatens the viability of their export contracts.

Adapting Contractual Strategies

In response to these rising costs, several industry bodies, including the Indian Rice Exporters Federation, have advised members to pivot their contractual terms. A notable shift involves moving away from Cost, Insurance, and Freight (CIF) agreements—where the exporter bears the responsibility for shipping and insurance—toward Free on Board (FOB) terms. Under FOB, the buyer assumes responsibility for securing insurance for the main voyage.

However, industry observers warn that shifting to FOB does not completely eliminate risk. If a foreign buyer’s insurance proves inadequate or fails during transit, the Indian exporter may still face significant payment collection issues, particularly if the deal is contingent upon the safe arrival of goods. This environment creates a specialized opening for insurance brokers, who can assist clients in securing contingency or “seller’s interest” cover to bridge these critical protection gaps.

For businesses engaged in Gulf trade, the immediate priority is to evaluate their current standing. Exporters should proactively review their upcoming consignments to leverage the enhanced cover provided under Component II, while smaller firms are encouraged to consult the ECGC dashboard to determine their eligibility for retroactive reimbursements under the MSME-focused Component III.

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