Middle East conflict may hit Ahmedabad, Rajkot engineering exports worth ₹750 crore

The ongoing Israel-US and Iran conflict is likely to deal a blow of over ₹750 crore to the engineering industries of Ahmedabad and Rajkot, as disruptions in shipping routes and rising costs begin to impact exports.

Gujarat exports engineering goods worth nearly $14.75 billion, and exporters say the conflict has already started affecting shipments.

Exports of textile machinery, pharmaceutical industry equipment, electrical machinery, industrial boilers and chemical process equipment from Ahmedabad have been disrupted.

Rajkot cluster faces major risk

The engineering cluster in Rajkot mainly produces diesel engines, submersible pumps, industrial pumps, bearings, auto parts, CNC machine components, casting and forging products, kitchen metal tools and watch components.

These products are largely exported to Europe, Africa, the Middle East and Southeast Asian countries. Industry players say the war has increased uncertainty in shipping routes and logistics.

Rising costs affecting industry

Moreover, the increase in crude oil prices is pushing up the cost of production. Industries such as casting, forging, foundry operations and machine manufacturing are facing rising expenses.

At the same time, electricity costs, transportation charges and freight rates have increased. The cost of importing scrap metals such as iron, steel, copper and aluminium, which are used to manufacture machinery, has also gone up.

Exporters say they are now being forced to send consignments through alternative routes, which has further increased transportation expenses and delivery time.

Shipping routes disrupted

Most engineering goods exports pass through Dubai, port of Jebel Ali and other Middle East shipping hubs before reaching their destinations. Exporters now have to pay higher insurance premiums for shipping, while restrictions around the Strait of Hormuz have added to supply chain concerns.

With crude oil and gas supplies getting disrupted and prices rising, the impact is also being felt by Rajkot’s foundry industry and Ahmedabad’s machinery exporters.

Industry worth billions

The engineering industry in Gujarat is estimated to be worth $10 billion to 12 billion in exports. From Rajkot alone, diesel engines worth about ₹300 crore are exported annually to Middle Eastern and African countries.

The city also exports machine tools worth ₹65 crore, bearings worth ₹230 crore, and foundry products worth ₹375 crore, along with pumps worth about ₹60 crore every year.

Major export destinations include Saudi Arabia, Nigeria, Egypt, Kenya, Oman, Qatar, Kuwait and the United Arab Emirates.

Export delays worry manufacturers

Rajkot exports auto parts worth over ₹400 crore annually to Gulf countries, the Middle East and European nations. These include connecting rods, pistons, crankshafts and engine liners, many of which are re-exported through Dubai.

Industry representatives say rising raw material costs, shipping delays and logistical challenges are putting pressure on manufacturers.

If the conflict continues for long, delays in delivering export consignments could further affect the engineering industry in Gujarat.