The Hindu : War puts $1.5 b contracts for India in jeopardy

Online edition of India's National Newspaper
Sunday, Mar 23, 2003

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War puts $1.5 b contracts for India in jeopardy

By Our Special Correspondent

NEW DELHI MARCH 22. The U.S. war on Iraq has jeopardised India's trade contracts worth $1.5 billion, which were facilitated under the United Nation's `Oil for Food Programme' for Iraq. Goods worth about Rs. 1,000 crores are under shipment as part of the programme and Indian exporters are unsure of the fate of these consignments, the FICCI secretary-general, Amit Mitra, has said.

The military action in Iraq by the U.S. and Britain has halted the Oil for Food Programme and the U.N. Secretary-General, Kofi Annan, is expected to work out alternatives over the weekend.

Mr. Mitra said a large consignment of goods was currently lying at the Umm Qasr port waiting to be discharged. However, this required clearance certificates from U.N. officials who had now left the country. Reports also indicated that the U.S. forces had taken over the new Umm Qasr port and were likely to take control of the oil port as well. It was not clear whether the U.N. officials would return following these developments, Mr Mitra said.

Secondly, there were shipments in transit to Umm Qasr while large consignments were lying at the Khorfkan port in Sharjah. As these goods cannot be shipped to Umm Qasr, there was concern whether the U.N. would allow these goods to be shipped to Aqaba in Jordan or to any port in Syria from where proper certification could be issued. Unless the certificates were issued, Indian exports would not get their payment.

Similarly, customs cleared cargo was lying in Indian ports for shipment to Iraq. It was not clear whether these goods should be held back or sent to Jordan or Syria. Also, in case of many export orders, the letter of credit was expiring within the coming two to three months and there was no clarity on the future course of action.

Mr. Mitra has also drawn attention to the reluctance and delay on the part of the Export Credit and Guarantee Corporation (ECGC) to provide insurance cover for shipments to Iraq. Besides, with enhanced security risks in the Gulf region, there was apprehension that freight rates would go up as the war enters the next phase. That could impact overall export trade from India.

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