How Houthi Attacks On Cargo Vessels In Red Sea Impact India's Exports, Think Tank Estimates 6.7 Per Cent Decline

Due to the threats to cargo vessels in the Red Sea causing a rise in container shipping rates, India's total exports could possibly decrease by around $30 billion in the current fiscal year. This situation is causing exporters to reconsider and delay their shipments.

The preliminary evaluation by the Research and Information System for Developing Countries, a think tank based in New Delhi, suggests a potential 6.7 per cent decline in Indian exports, referring to the previous fiscal year's total of $451 billion, Economic Times reported.

Sachin Chaturvedi, the think tank's director general, expressed that the Red Sea crisis could indeed affect India's trade, possibly leading to a further reduction. No official estimates regarding the crisis's impact on Indian exports have been released by the government.

Data from Clarkson Research Services Ltd, a division of the world's largest ship broker, indicates a 44 per cent decrease in the number of ships traversing the Suez Canal compared to the first half of December's average.

Approximately 2.5 million gross tons of vessels passed through in the week leading to 3 January, a significant decrease from around 4 million tons at the beginning of the previous month.

In recent weeks, vessels passing through the Red Sea have been targeted by missiles from the Houthi militants in Yemen, who are backed by Iran. The Houthis claim they are specifically targeting any vessels associated with Israel.

The Red Sea serves as a crucial shipping route for India, facilitating trade with Europe, the US East Coast, the Middle East, and African nations. The government, led by Prime Minister Narendra Modi, is currently engaging with export promotion councils to devise strategies to safeguard trade traversing this route, as per two officials privy to the situation.

In a recent development, India dispatched a warship to the Arabian Sea following reports of a hijacking near the coast of Somalia involving a Liberian-flagged vessel. The Indian Navy has since announced the successful rescue of the ship.