Several factors are expected to impact on the letter of credit (L/C) market in India and beyond as the country tackles a deadly second coronavirus wave.

Banks have been advised by the Indian Banks' Association to restrict their working hours between 10am to 2pm, supplies of imported raw materials imports are disrupted with some shipping companies boycotting south Asian ports while India's export customers are increasingly looking elsewhere for reliable suppliers.

Dire situation

India has witnessed a huge surge in daily cases of coronavirus with the country reporting consistently over 300,000 new cases a day since 20 April.

Today India reported 343,144 new cases in the last 24 hours while deaths from the virus rose by 4,000.

Ports restricted

India's ports are suffering manpower shortages and reduced working hours due to local lockdowns.

Strict health protocols for port personnel and crew of vessels unloading requiring them to test negative for the virus are causing operational delays.

Knock on L/C impacts

Shorter banking hours could pose processing delays for L/C payments while shipping disruption could lead to failures to meet L/C obligations.

Importers in Bangladesh used to trading on L/C terms have also been affected as they increasingly turn to suppliers outside India due to commercial disruption there.

According to Harun Ur Rashid, president of the Hili Land Port Importers'-Exporters' Group representing traders on the India-Bangladesh border, non-Indian exporters to Bangladesh are not accepting L/Cs now as shipment of goods are being hampered in the wake of the pandemic.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.