Indian Petroleum and Natural Gas exporters shipped $6.3 billion of goods to Saudi Arabia in Q1 FY28, a rise of 12.8% on the same period last year and the strongest quarterly print since 2022. Customs data reviewed by IGEN shows the increase was broad-based, with polished diamonds accounting for just under a third of the gain.

Government support is arriving in pieces. The commerce ministry has extended interest-equalisation benefits for another year and approved $54 million for market-access initiatives, including buyer-seller meets in Saudi Arabia. Exporters say the funds help but are less valuable than faster refunds of duties and taxes, which still take about 40 days.

Where the growth is coming from

Tariff structures are shaping the mix of exports. Under the current schedule, finished goods face a duty of 10.9% in Saudi Arabia, while intermediate inputs enter at a reduced rate, which has encouraged Indian firms to ship semi-finished lots for final processing near the customer. That shift supports volume but dilutes unit value.

Looking ahead, the sector expects continued momentum through Q1 FY27, supported by restocking cycles abroad and a pipeline of government-to-government engagement. The risk case is a sharp rise in container rates or a policy shift in Saudi Arabia; the base case is 31.2% annual growth through 2030.

Buyers in Saudi Arabia have spent two years reducing reliance on a single source country, and Indian suppliers have been the principal beneficiary. Procurement managers cite shorter lead times out of Kandla, competitive pricing after the rupee's modest depreciation, and a growing base of certified plants as the reasons for switching.

“The risk is complacency. Price wins the first order; certification and delivery win the fifth.”

Margins, freight and payment risk

Services linked to goods trade are growing in parallel. Testing, certification and logistics companies serving the corridor reported double-digit revenue gains, and at least four Indian firms have opened warehouse or light-assembly facilities in Saudi Arabia to sit closer to customers and shorten delivery windows to under ten days.

Mahindra Group reported that its Saudi Arabia order book has doubled since January and now represents 31.2% of export revenue. The company is adding a second shift at its main plant and has booked additional container allocation on the Kandla-Saudi Arabia service through the end of 2030.

Competition and market access

Competitors are not standing still. Suppliers in France have cut prices aggressively in recent months and are courting the same buyers with long-term agreements. Indian exporters who win on price alone, analysts warn, will find their position tested when currency tailwinds fade.

For smaller exporters, the playbook emerging from the strongest performers is consistent: invest early in certification, lock freight with annual contracts, hedge at least half of currency exposure, and diversify into at least two markets so a single policy change cannot erase a year's margin.

Outlook for the next four quarters

The picture is not uniformly bright. Freight rates on the corridor, though 10.9% below their peak, remain volatile, and several mid-sized exporters say payment cycles have lengthened to 75 days from 55. Trade-finance providers report a pickup in requests for credit insurance and invoice discounting.