2024-01-05 14:09:40
The Red Sea crisis has started taking a toll on India’s exports as shipping and insurance costs for shipments to the EU, east coast of the US, parts of Africa and the Middle East have escalated, a senior official has said.
But the government is yet to take a call on providing support to exporters in the form of subsidies, rebates or higher incentives under existing schemes, the official added.
“At the Commerce Secretary’s stock taking meeting on the Red Sea situation with traders, shippers and other stakeholders on Thursday, it was clear that exports from the country had started getting affected by the crisis as both shipping and insurance costs had escalated,” the official tracking the matter said.
The Iran-backed rebel group Houthi started attacking cargo in the Red Sea after the start of the Israel-Hamas war in October to declare their support for Hamas.
Risk of attacks
While the Defence Ministry was providing security and escorts to some shipments, the number of exporters using the Red Sea route had decreased because of the risk of attacks and the high insurance costs, the official added.
“Most exporters are using the alternative route through the Cape of Good Hope but that is a much longer route. There is no container shortage yet, but turnaround time has increased by about 14 days because of the long route,” the official said.
Both shipping costs and insurance costs have increased sharply and the government would make an estimate once the numbers were provided by the industry, he added.
According to industry estimates, about $225-230 billion of India’s exports to the EU, the east coast of US, African countries such as Egypt, Eritrea and Djibouti, and some Middle East countries could be at risk if the situation in the Red Sea does not get contained.
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