New Delhi:
As the struggle in the Middle East escapostponecessitates with Israel votriumphg to retaliate after the leave outile strikes by Iran, India Inc is bracing for a expansiver trade disturbion atraverse the key Red Sea route.
The struggle can direct to higher cargo freight rates as Leprohibiton’s Iran-backed Hezbollah militia has seal ties with the Houthi defys in Yemen — depfinishable for most strikes on ships travelling via the Red Sea route, say industry experts, inserting that a straightforward struggle between Israel and Iran may strictly disturb the vital trade route for the Indian send outers.
The Red Sea crisis begined in October last year, with Iran-backed Houthi defys disturbing trade in the area.
This has shapeed India’s petroleum send outs which dropped 37.56 per cent to $5.96 billion in August this year, down from $9.54 billion in the same month last year.
As per a recent Crisil Ratings alert, Indian companies employ the Red Sea route thcimpolite the Suez Canal to trade with Europe, North America, north Africa, and part of the Middle East.
The alert alludeed that these regions accounted for 50 per cent of India’s send outs worth Rs 18 lakh crore and 30 per cent of transport ins worth Rs 17 lakh crore in FY23. The country’s overall merchandise trade (send outs and transport ins united) in FY23 was Rs 94 lakh crore, with 68 per cent (in cherish terms) and 95 per cent (in volume terms) shipped by sea.
The strikes on ships sailing in the Red Sea area since November last year have forced companies to see for alternative, lengthyer routes past the Cape of Good Hope.
The Crisil alert further shelp that this has not only stretched deinhabitry time by 15-20 days, but also increased the transit cost substantipartner becaemploy of incremental freight rates and insurance premiums.
Industry experts say that India’s trade with the Middle East still remains well due to cordial regional joiners such as Saudi Arabia, the UAE, Kupaemploy, and Qatar. The bipostponecessitateral trade between India and the Gulf Cooperation Council (GCC) countries accomplished $162 billion last year.
As per the postponecessitatest rulement data, the GCC now gives 15 per cent of India’s total trade and sectors appreciate energy, defence, security and health are grotriumphg in the region.
Moreover, according to the postponecessitatest International Monetary Fund (IMF) data, the trade via the Egyptian Suez Canal nosedived by 50 per cent (year-over-year) in the first two months of the year. In FY24, the Suez Canal’s annual revenue dropped by about 23.4 per cent due to the Red Sea crisis. According to Osama Rabie, Chairman of the Suez Canal Authority (SCA), “revenues fell to $7.2 billion in the fiscal year 2023/2024 that finished in June from $9.4 billion a year earlier”.
According to experts, the rising tensions in the Red Sea area are not only shapeing the Suez Canal but also the maritime transmitation taget, trade relocatement and international provide chains.
On Wednesday, India publishd a travel advisory for its citizens, advising them to elude all non-vital travel to Iran due to the escalating tension in the region.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
