The government has admitted that the Iraq war will have an adverse impact on India's external trade but expressed the hope that the post-war recovery will cushion the impact.

''The impact of the Iraq war on our external trade will be there but no one can quantify it. We expect the United States and European economy to move on a higher growth path after the war. If that happens our exports to these markets will also go up,'' Union Minister of State for Commerce Rajiv Pratap Rudy said on Thursday.

''Everything depends on the duration the war will extend to,'' he told newsmen after the convocation of Footwear Design and Development Institute under his ministry.

Exporters say that the strikes on Iraq will result in immediate cancellation of the buyers' visits to India, sharp increase in freight charges and insurance premium.

While the exporters do not expect any new order at all as long as there is action against Iraq, the transaction cost for the orders in hand would also go up considerably.

''The costs for exporters will go up and they will have to struggle to stay competitive,'' Rudy said.

The minister was, however, hopeful that any damage done to India's exports by war in the initial days of 2003-04 would be made for by the increase in demand after the war.

The target of 12 per cent growth in exports in 2002-03 will, however, be achieved as the war has broken out when a few days of the fiscal are left.

The fear of war had already started hitting the export growth in the last 45 days. The growth target will be met because of impressive performance in the first three quarters of the current fiscal.

Meanwhile, The Federation of Indian Export Organisations on Friday said the ongoing war in Iraq would severely hit India's exports to Europe, Middle East and Eastern Africa due to a drastic hike in tariff on shipments and rise in war surcharge.

UNI