Chennai|New Delhi: A number of exporters in sectors such as electronics, gems and jewellery, apparel and footwear are airlifting consignments to the US to deliver products ahead of April 2, when reciprocal tariffs are due to come into force, industry officials said.
"Exporters are doubling down on sending consignments by air," Ajay Sahai, director general of the Federation of Indian Export Organisations told ET. "But this is only possible for limited varieties of products like smartphones and electronics, gems and jewellery, some footwear like sports shoes and some apparel." Typically, companies looking to ship a hundred containers would split it in half over two months. But now, they are now taking it slow as buyers are asking them to "send 25 containers in the first month and 25 containers each over subsequent three months," he added.
Limited products
But now, they are now taking it slow as buyers are asking them to “send 25 containers in the first month and 25 containers each over the subsequent three months,” Ajay Sahai, director general of the Federation of Indian Export Organisations (FIEO), told ET.
Generally, air freight is seven to eight times higher than sea freight.
However, spooked by the US tariff uncertainty, some companies are braving a slew of logistical challenges to hasten delivery by air, instead of the traditional mode of shipping.
“Exporters are doubling down on sending their consignments by air,” said Sahai. "But this is only possible for limited varieties of products like smartphones and electronics, gems and jewellery, some footwear like sports shoes and some apparel."
"The uncertainty around tariffs has concerned exporters and is causing pressure," he said, pointing out that while “the orderbook is very strong, we are seeing that despatches (by shipping) are low.”
India’s goods exports shrank for the third straight month in January, declining 2.38% on-year to $36.43 billion. The merchandise trade deficit widened to a two-month high of $22.99 billion, from $16.56 billion a year ago and $21.94 billion in December 2024.
India aims to clock $800 billion in goods and services exports this fiscal year.
ET reported on March 11 that India is considering incentives for exporters to arrest the decline in outbound shipments and mitigate potential impact of reciprocal tariff plans by the Donald Trump administration.
These incentives could be part of the Export Promotion Mission announced in the budget and are likely to be notified in a month. Though the government is yet to firm up the structure, the Rs 2,250-crore mission has room for flexibility in giving more incentives as the schemes are yet to be notified, an official had said earlier.
Temporary move
FIEO's Ajay Sahai termed the rush to airlift consignments an “aberration” induced by the uncertainty of tariffs, more so, as only a fraction of the consignment can be transported by air
“We have limited flights, limited belly capacity and even limited freighters," he explained. "And many bookings are generally done in advance, so it leaves very limited space for additional capacity. It is possible for smaller consignments and for certain high-value shipments like electronics and gems and jewellery, but even for those scurrying to make the April 2 deadline, it may not be adequate owing to these logistical challenges.”
However, container shipping associations pointed to exporters dragging their feet in signing annual contracts.
"While the hesitancy on the part of some of the exporters on signing of their new annual contracts with the lines, which normally happen around this time of the year, is understandable, it would be in their (exporters’) own interest to sign up to secure rates and space for themselves, as spot rates are generally higher, with no guarantees on space," said Sunil Vaswani, executive director at Container Shipping Lines Association (India).
He added that with shipping services having moved over to the Cape of Good Hope, instead of the Suez Canal/Red Sea, space, cost and timely deliveries have become only more critical, underscoring the increased importance of service contracts.
Exporters optimistic
Several exporters, however, remain optimistic about a resolution to the tariff impasse, especially via the India-US Bilateral Trade Agreement (BTA).
“Our customers are not panicking. India and the US are negotiating a BTA, and efforts are ongoing to balance the trade. There are no concerns on sending the goods via sea," said Rafeeque Ahmed, chairman of the Farida Group, one of India’s largest shoe manufacturers and exporters.
"Exporters are doubling down on sending consignments by air," Ajay Sahai, director general of the Federation of Indian Export Organisations told ET. "But this is only possible for limited varieties of products like smartphones and electronics, gems and jewellery, some footwear like sports shoes and some apparel." Typically, companies looking to ship a hundred containers would split it in half over two months. But now, they are now taking it slow as buyers are asking them to "send 25 containers in the first month and 25 containers each over subsequent three months," he added.
Limited products
But now, they are now taking it slow as buyers are asking them to “send 25 containers in the first month and 25 containers each over the subsequent three months,” Ajay Sahai, director general of the Federation of Indian Export Organisations (FIEO), told ET.Generally, air freight is seven to eight times higher than sea freight.
However, spooked by the US tariff uncertainty, some companies are braving a slew of logistical challenges to hasten delivery by air, instead of the traditional mode of shipping.
“Exporters are doubling down on sending their consignments by air,” said Sahai. "But this is only possible for limited varieties of products like smartphones and electronics, gems and jewellery, some footwear like sports shoes and some apparel."
"The uncertainty around tariffs has concerned exporters and is causing pressure," he said, pointing out that while “the orderbook is very strong, we are seeing that despatches (by shipping) are low.”
India’s goods exports shrank for the third straight month in January, declining 2.38% on-year to $36.43 billion. The merchandise trade deficit widened to a two-month high of $22.99 billion, from $16.56 billion a year ago and $21.94 billion in December 2024.
India aims to clock $800 billion in goods and services exports this fiscal year.
ET reported on March 11 that India is considering incentives for exporters to arrest the decline in outbound shipments and mitigate potential impact of reciprocal tariff plans by the Donald Trump administration.
These incentives could be part of the Export Promotion Mission announced in the budget and are likely to be notified in a month. Though the government is yet to firm up the structure, the Rs 2,250-crore mission has room for flexibility in giving more incentives as the schemes are yet to be notified, an official had said earlier.
Temporary move
FIEO's Ajay Sahai termed the rush to airlift consignments an “aberration” induced by the uncertainty of tariffs, more so, as only a fraction of the consignment can be transported by air“We have limited flights, limited belly capacity and even limited freighters," he explained. "And many bookings are generally done in advance, so it leaves very limited space for additional capacity. It is possible for smaller consignments and for certain high-value shipments like electronics and gems and jewellery, but even for those scurrying to make the April 2 deadline, it may not be adequate owing to these logistical challenges.”
However, container shipping associations pointed to exporters dragging their feet in signing annual contracts.
"While the hesitancy on the part of some of the exporters on signing of their new annual contracts with the lines, which normally happen around this time of the year, is understandable, it would be in their (exporters’) own interest to sign up to secure rates and space for themselves, as spot rates are generally higher, with no guarantees on space," said Sunil Vaswani, executive director at Container Shipping Lines Association (India).
He added that with shipping services having moved over to the Cape of Good Hope, instead of the Suez Canal/Red Sea, space, cost and timely deliveries have become only more critical, underscoring the increased importance of service contracts.
Exporters optimistic
Several exporters, however, remain optimistic about a resolution to the tariff impasse, especially via the India-US Bilateral Trade Agreement (BTA).“Our customers are not panicking. India and the US are negotiating a BTA, and efforts are ongoing to balance the trade. There are no concerns on sending the goods via sea," said Rafeeque Ahmed, chairman of the Farida Group, one of India’s largest shoe manufacturers and exporters.
