Even as Commerce and Industry Minister Arun Jaitley said that exports would not be hit due to the US-led attack on Iraq, industry chambers and government officials painted a grimmer picture.
"My preliminary reaction is that the war will not adversely affect our exports in any way," Jaitley said after a meeting with industry chambers on the Exim Policy for 2003-04.
"We will have to see what is the duration of the war in order to make a final assessment," he added.
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Officials, however, said future orders from Europe and the US could be affected if the war lasted for a while. They said that increase in fuel prices and insurance premiums would raise production costs and affect exports.
The Federation of Indian Export Organisations (FIEO) said in a statement that exports to West Asia, eastern Africa and Europe would be affected.
Shipping costs would increase because vessels would have to change their routes, which would severely affect exports to Europe, the organisation said. A war surcharge on shipments would further increase costs, FIEO President Rafique Ahmed said.
A similar view was expressed by Minister of State for Commerce and Industry Rajiv Pratap Rudy, who said that fluctuation in oil prices would hit exports by affecting transportation and aviation costs.
"Since domestic production is linked to fuel prices, an increase in transaction costs would affect exports," he said.
He said the government would try its best to offset the repercussions of the war.
Jaitley also said he was confident of achieving the export target of $50 billion for 2002-03 and said, "We are already close to the target."
He said the target would be met entirely through merchandise exports and would not include the services and infotech sectors, which were deemed exports. The minister said India's share in world trade would touch 1 per cent by 2007.
The Exim Policy for 2003-04, to be announced later this month, will have to identify engines of growth not only to achieve the 1 per cent share in world trade, but also for "a larger purpose".
Reasoning his optimism, he said last year had been better as exports grew 20 per cent in the first nine months and added that the growth figure was deceptive since the previous year had been bad.