The war in West Asia has reshaped India’s trade geography, prompting businesses to reassess export destinations and shipping routes. Notable developments include the sharp rise in India’s exports to Singapore and the decline in exports to the UAE.
The UAE remains India’s gateway to markets across West Asia, Africa and Europe, benefiting from geographic proximity, a large Indian diaspora and lower transportation costs. Singapore, on the other hand, serves as a key hub for East and Southeast Asia.
Whether the current export surge, partly led by higher costs of energy products, endures will depend on the extent to which Singapore’s structural advantages continue to shape trade flows once the current disruptions subside.
Shifting shores
India’s to Singapore rose 124% year-on-year to $5.07 billion in April-May, recording the sharpest rise among all major destinations. The increase was partly driven by higher export values, supported by elevated crude oil prices. However, there are also signals of a greater volume increase.
Petroleum and crude product exports also rose in volume terms by 130% year-on-year and 37% month-on-month in April. The volume data for May is yet to be released.
This helped Singapore meaningfully increase its share in India’s export basket even as the share of the two largest export destinations—the US and the UAE—declined, pointing to greater diversification across markets and reduced reliance on traditional partners.
While the US remained India’s largest destination, its share in India’s exports fell from 22.5% to 19.5%. Similarly, the UAE’s share declined from 8.4% to 5.9%. Singapore’s share nearly doubled to 5.7% in April-May from the same period a year ago. Singapore’s rise reflects not only demand from its domestic market but also its role as a major trading, distribution and re-export hub serving markets across East Asia, Southeast Asia and the Pacific.
Petroleum pivot
A closer look at India’s rising exports to Singapore suggests that petroleum products, particularly gasoil (diesel), played a significant role in driving the surge. Singapore serves as Asia’s leading oil trading, storage and redistribution hub. The disruption in West Asia oil exports following the closure of the Strait of Hormuz triggered a sharp reorientation of regional energy trade flows.
Physical crude oil prices climbed to almost $150 per barrel in April, while middle distillate prices in Singapore rose to record levels of more than $290 per barrel, according to the International Energy Agency. As supply shortages intensified, Singapore sought alternative sources to maintain inventories and trading activity.
Over the 12 months to March 2026, South Korea and Malaysia together accounted for about 45% of Singapore’s gasoil imports. However, in March alone, India emerged as the largest supplier, accounting for roughly 37% of imports. The momentum continued into April and May, reflecting India’s ability to maintain high refinery utilization rates by diversifying crude sourcing.
Port power
Exporters increasingly route consignments through Singapore during periods of geopolitical disruption due to its role as one of the world’s leading transhipment and re-export hubs. Transhipment refers to the transfer of cargo from one vessel to another at an intermediate port before it reaches its final destination, while re-exports involve importing goods and exporting them again, often after storage, consolidation, sorting, or minor processing.
In 2024, nearly 90% of the cargo handled by Singapore comprised transhipment cargo, highlighting its central role in regional supply chains. Singapore also offers a highly efficient logistics infrastructure, supported by strong customs processes, advanced digital trade systems, and a business-friendly regulatory environment.
These strengths helped it secure the top position in the World Bank’s Logistics Performance Index in 2023. Its strategic location along the Strait of Malacca, one of the world’s busiest maritime corridors, combined with extensive oil storage, warehousing and logistics facilities, helps firms manage supply disruptions and inventory requirements during periods of uncertainty. As a result, exporters often view Singapore not merely as a destination market but as a gateway to a wide range of Asian markets, including China, Japan and South Korea.
Export evolution
India and Singapore signed the Comprehensive Economic Cooperation Agreement (CECA) in 2005, which reduced trade barriers and improved market access. Since then, India’s exports to Singapore have increased from $4.0 billion in 2004-05 to $11.9 billion in 2025-26. This growth has been driven not only by petroleum products but also by non-petroleum exports such as electronics, machinery, chemicals and engineering goods.
Yet, this does not signal improved performance on another metric. Singapore’s share of India’s total exports declined until FY26, suggesting the rising importance of other countries. This was partly because India’s largest export destinations include major consumer markets such as the US and gateway economies such as the UAE and the Netherlands.
The UAE, in particular, enjoys significant advantages owing to its geographic proximity to India, lower transportation costs and established business networks supported by a large Indian diaspora. Singapore, by contrast, primarily serves as a trading and redistribution hub rather than a large end market. Going forward, however, its ability to provide secure, efficient and highly connected access to regional markets during periods of disruption could further strengthen its role in India’s evolving trade geography, even if this comes at somewhat higher logistics costs.
Capital connections
A major reason Singapore could continue to play an important role in India’s export landscape beyond the current crisis is its position as a major source of investment capital. The India-Singapore CECA and the 2005 amendment to the Double Taxation Avoidance Agreement helped strengthen investor confidence and facilitate greater cross-border capital flows. As a result, Singapore has emerged as India’s largest source of foreign direct investment (FDI), accounting for nearly a quarter of cumulative inflows into India since 2000. Empirical evidence suggests that trade and investment often reinforce one another.
Foreign fund inflows help firms expand production capacity, adopt new technologies, improve logistics networks and integrate into global value chains, all of which can support export growth. Singapore’s role as a leading global financial centre has also enabled Indian firms to access international capital, trade finance and treasury services. Recent initiatives, such as linking India’s UPI to Singapore’s PayNow, along with growing cooperation in fintech, digital trade, and sustainable finance, could help sustain trade flows even after the current geopolitical disruptions subside.
Puneet Kumar Arora is an assistant professor of economics at Delhi Technological University. Jaydeep Mukherjee is a professor of economics at Great Lakes Institute of Management, Chennai.