Trade Advisory for Indian Exporters
Key Cautions to be followed during the war situation.
Global conflicts—whether in the Middle East, Europe, or key maritime routes—directly impact freight, insurance, payments, and delivery commitments. Indian exporters must act with heightened caution in two critical situations.
1. When Cargo Has Already Left Indian Shores (In-Transit Shipments)
2. When Purchase Order is Received but Shipment is On Hold
Let us understand how to mitigate risk involved in both the above cases.
Situation One – Once the shipment is dispatched, control reduces—but risk management becomes crucial.
- Track Shipment & Route Diversions
- Monitor vessel movement daily (especially if routed via sensitive zones like the Red Sea or Suez Canal)
- Be prepared for rerouting via the Cape of Good Hope (longer transit time)
- Stay in Constant Touch with Shipping Line
- Get real-time updates on:
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- Port congestion
- War zone advisories
- Vessel delays or diversions
- Review Marine Insurance Coverage
- Ensure policy includes:
- War Risk Clause
- Strike, Riot & Civil Commotion (SRCC)
- If not covered, immediately coordinate with insurer for extensions
- Be Prepared for Unexpected Costs (additional cost)
- Possible additional charges:
- War Risk Surcharge (WRS)
- Bunker Adjustment Factor (BAF)
- Emergency Operational Surcharges
- Communicate Transparently with Buyer
Inform buyer about:
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- Delays
- Route changes
- Cost implications (if contract allows)
- Maintain written communication for legal protection
- Monitor Payment Security – for shipments under:
- LC (Letter of Credit) → Check expiry & document timelines
- DA/DP terms → Assess buyer’s country risk exposure
- Keep Documentation Strong
- Maintain:
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- Bill of Lading
- Insurance certificate
- Commercial invoice
- Packing List
- Purchase Order / Proforma Invoice
- In case of dispute, documentation becomes your strongest defense
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- Watch for Port Disruptions at Destination
- Destination ports near conflict zones may face:
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- Closure
- Labor shortages
- Customs delays
- Activate Contingency Planning
- Identify alternate ports or buyers (if diversion becomes necessary)
Situation Two – When Purchase Order is received but Shipment is not dispatched
This is the most critical decision-making stage—where risk can be minimized or avoided. Re-evaluate Country Risk.
- Avoid or reassess shipments to:
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- Conflict-affected regions
- Economies facing sanctions or instability
- Insist on Secure Payment Terms
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- 100% Advance Payment, or
- Irrevocable Letter of Credit (LC) confirmed by a reputed bank
- Avoid open credit in high-risk regions
- Recalculate Export Pricing
- Include:
-
-
- Increased freight rates
- War risk insurance premium
- Potential delays
- Revise quotation validity period (short-term quotes only)
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- Check Logistics Feasibility
- Confirm:
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- Vessel availability
- Safe shipping routes
- Transit time changes
- Strengthen Contract Clauses
- Clearly include:
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- Force Majeure Clause
- War & conflict clauses
- Delivery timeline flexibility
- Verify Buyer Credibility Again
- Even existing buyers may face:
-
-
- Financial instability
- Currency issues
- Conduct fresh due diligence or verification of the buyer
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- Avoid Over-Commitment
- Do not accept large volume orders without:
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- Supply chain certainty
- Logistics confirmation
- Check Government Notifications
- Stay updated with:
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- DGFT advisories
- Shipping restrictions
- Sanctions on specific countries
- Plan Inventory & Production Carefully
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- Avoid overproduction if shipment uncertainty exists
- Maintain flexibility in order execution
- ·Hedge Currency Risk
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- War leads to currency volatility
- Lock exchange rates via forward contracts if exposure is high