Red Sea Crisis Impacts Indian Exports: Shipping Costs Rise

By By Rediff Money Desk, NEWDELHI
Jan 15, 2024 21:11
Indian exporters face delays and higher costs due to the Red Sea crisis, impacting shipping routes and freight rates. The government is providing support to exporters.
Photograph: Ralph Orlowski/Reuters
New Delhi, Jan 15 (PTI) Indian exporters are holding their consignments due to increasing shipping costs amid the Red Sea crisis, according to information provided by export promotion councils to the commerce ministry.

Commerce Secretary Sunil Barthwal said that the government has provided a cushion to exporters by asking the ECGC not to increase the export credit interest rates.

State-owned ECGC is an export promotion organisation, seeking to improve the competitiveness of Indian exports by providing them with credit insurance covers.

"To that extent, we are going to give that kind of comfort to our exporters," Commerce Secretary Sunil Barthwal told reporters here.

He added that if the demand is robust in Western countries, Indian exports will grow.

India's competitor nations are also facing higher costs due to the crisis.

"Therefore they are as less competitive as we are. It fairly balances everybody. So ultimately it (exports growth) will depend upon demand over there (in the Western world),” he said.

The crisis is impacting shipping lines and containers and due to this, freight rates are high.

"It is a global issue, it is not an India-specific issue. A lot of commodities move from the eastern side to the western from the Suez Canal. Everybody is concerned about it, looking into it and trying to help each other. So let us see how this global cooperation works out," he said.

The situation around the Bab-el-Mandeb Strait, a crucial shipping route connecting the Red Sea and the Mediterranean Sea to the Indian Ocean, has escalated due to recent attacks by Yemen-based Houthi militants.

Due to these attacks, the shippers are taking consignments through the Cape of Good Hope, resulting in delays of almost 14-20 days and also higher freight and insurance costs.

The secretary said that export promotion councils have been asked to immediately brief the government on any major issue faced by them but so far they have not given any "serious" feedback.

During December-January, the exporters normally face higher congestion surcharge due increased traffic on seas but this time the increase has been much more.

On January 17 an inter-ministerial meeting has been called on the Red Sea issue that will see the participation of the Ministry of External Affairs, Commerce, Shipping, Defence and Department of Financial Services.

Post that, another meeting with the exporters has been planned.

Around 80 per cent of India's merchandise trade with Europe passes through the Red Sea and substantial trade with the US also takes this route. Both these geographies account for 34 per cent of the country's total exports.

The Red Sea strait is vital for 30 per cent of global container traffic and 12 per cent of world trade. About 95 per cent of the vessels have rerouted around Cape of Good Hope adding 4,000-6,000 nautical miles and 14-20 days to journeys.
Read More On:
red sea crisisindian exportsshipping costsfreight ratesbab-el-mandeb strait
DISCLAIMER - This article is from a syndicated feed. The original source is responsible for accuracy, views & content ownership. Views expressed may not reflect those of rediff.com India Limited.

You May Like To Read

MORE NEWS

RBI Adds 8 Tons Gold to Reserves in Nov 2024: WGC

The Reserve Bank of India added 8 tonnes of gold to its reserves in November 2024,...

Akzo Nobel India to Sell Powder Coatings Biz,...

Akzo Nobel India's board has approved exploring the sale of its powder coatings...

Market Crash: Investors Lose Rs 10.98 Lakh Crore

Indian markets crashed today, wiping out Rs 10.98 lakh crore of investor wealth due to...

Rane & ZF Partner for Electric Power Steering...

Rane and ZF announce collaboration to introduce rack drive and column drive electric...

ICICI Securities Settles Sebi Case for Rs 40.2...

ICICI Securities has settled a case with Sebi for alleged violation of stock brokers...

IIFCL to Raise Rs 8,000 Cr via Borrowing in Q4...

India Infrastructure Finance Company Ltd (IIFCL) plans to raise Rs 8,000 crore from...

RBI Consolidates Credit Information Reporting...

The Reserve Bank of India (RBI) has issued a master direction consolidating...

Fisheries Minister Launches 50 Projects in...

Union Fisheries Minister Rajiv Ranjan Singh launched 50 projects worth Rs 50 crore in...

Regional Air Connectivity Remains Govt...

India's civil aviation secretary emphasizes regional air connectivity as a priority,...

P S Raj Steels IPO Approved by NSE Emerge

P S Raj Steels, a stainless-steel pipes and tubes manufacturer, has received...

Read More »

Sectoral Indices Market Indicators Listed Companies Gainers Losers Mutual Funds Portfolio Watchlist
© 2025 Rediff.com