As threats grow over the safety of cargo ships in the Red Sea. India is at major risk of a significant decline in exports.
India can potentially see a drop in exports by approximately $30 billion. Due to the recent incidents in the Red Sea that have led to increased threats to cargo vessels, Exporters are resisting the shipments due to rising fears about the safety of cargo ships in the region.
According to an initial assessment by the Research and Information System for Developing Countries, a New Delhi-based think tank, there could be a 6-7 percent decrease in exports due to heightened concerns about cargo ships in the Red Sea. Let us tell you that last year India’s total exports amounted to around $451 billion. But now there can be a potential decline. Sachin Chaturvedi, the director-general of the think tank, stated to Bloomberg, “The crisis in the Red Sea would indeed impact India’s trade and may lead to further contraction.” However, the government has not provided any approximation of the potential loss of exports that will rise from the Red Sea crisis.
For those unaware The Red Sea plays a major role in the export route for India, serving as the primary channel for shipping to Europe, the US East Coast, the Middle East, and African countries. As the concerns rise the Modi government is actively in discussions with export commission councils so that there is a safe passage of export vessels.
Amid the conflict between Israel and Hamas, vessels passing through the Red Sea have been targeted with missiles in recent weeks by Yemen’s Iran-backed Houthi militants. The Houthis claim to be targeting vessels with connections to Israel. In response to the reported hijacking of a ship flying the Liberian flag near the coast of Somalia, India dispatched a warship to the Arabian Sea. successfully rescuing the ship. However, this incident has heightened fears among Indian export cargo ships.
Due to the increasing threats in the Red Sea, the number of vessels transiting the Suez Canal has dropped by 44 percent compared to the average for the first half of December 2023. Also according to a unit of the world’s largest shipbroker Clarkson Research Services Ltd., the current scenario highlights the need for vigilance and strategic measures to safeguard India’s export interests during the Red Sea crisis.