How Red Sea attacks put India’s trade at risk
The Gaza war has long posed the risk of escalating into a broader crisis for the global economy, and recent developments in the Red Sea are proving this concern to be valid. Yemen's Houthi militants have been attacking commercial ships, purportedly in solidarity with Palestine, potentially jeopardizing global supply chains and driving up commodity prices, especially for fuel. It goes without saying that India is vulnerable to these cascading impacts.
The Red Sea, which starts from the Bab-el-Mandeb Strait and leads into the Suez Canal, offers the fastest sea route connecting Asia with Europe and the eastern coast of North America. Alternative routes that shipping companies are now taking are longer and costlier. Petroleum, basmati rice, automobile components, machinery, chemicals, plastics, readymade garments and footwear are among the items that trade bodies say are likely to be impacted among those most important to India.
A delay in securing timely supplies and higher costs of transporting goods could stoke fresh inflationary pressures for the economy. “India, heavily reliant on this route for trade and energy imports, faces increased costs and security risks, prompting efforts to diversify trade routes and enhance regional maritime security cooperation," said Global Trade Research Initiative (GTRI), a think-tank, last month. Around 10% of global crude oil and petroleum products pass through the Red Sea, and part of that is Russia’s shipments to India, which make up nearly one-third of India’s oil imports.
However, last week, ports, shipping and waterways secretary T. K. Ramachandran claimed the crisis would have "no impact" on India's trade with the rest of the world, PTI reported.
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