Vantage | How the Red Sea crisis is hurting India

In recent times, the world has been gripped by a crisis unfolding in the Red Sea, where relentless missile attacks continue unabated. In this unfolding scenario, US ships have become a target, prompting a swift response from American forces. The crisis has far-reaching consequences and its impact is acutely felt by nations relying on the Red Sea trade route.

Economic toll on India

India, a significant player in global trade, is heavily reliant on the Red Sea route, which serves as a gateway to key regions such as Europe, North America, North Africa and West Asia. According to CRISIL Ratings, these regions constituted approximately 50 per cent of India’s exports and 30 per cent of imports in the fiscal year ending March 2023.

The crisis has led to substantial delays in shipping with goods worth billions being supplied through this crucial route. India’s exports through the Red Sea valued at Rs18 trillion ($217 billion) and imports from these regions, worth Rs17 trillion ($205 billion), have been significantly impacted.

More from Opinion

India-EU summit sends strategic signal to the US — but will it be received? All is not well in Beijing: How Xi’s grip on power is being tested like never before

Logistics nightmare

The time taken to move goods has increased substantially with shipments being delayed by almost a month (21 to 28 days). Ships are avoiding the Red Sea route, opting instead for the longer and more expensive journey around the Cape of Good Hope, adding 6,500 kilometres and at least two extra weeks of sailing time.

The crisis has led to a situation where 25 per cent of India’s outbound shipments have been held back. Exporters are facing difficulties finding ships willing to take the Red Sea route, leading to substantial losses. Approximately 95 per cent of cargo ships from India have opted for the longer Africa route anticipating a prolonged crisis.

Quick Reads

View All

Budget 2026: Reforming the state, not just the economy

India-EU summit sends strategic signal to the US — but will it be received?

Indian Navy’s role

To mitigate the crisis, the Indian Navy has been actively involved in securing vital routes and rescuing sailors under threat. Despite these efforts, the shipments haven’t stabilised and experts are projecting significant losses for India’s exports.

Experts predict that a prolonged disruption will adversely impact India’s economic growth. Fitch Ratings has raised concerns, stating that if Red Sea disruptions persist, significant downward revisions to India’s growth forecast are likely, denting the overall growth forecast for Asia in 2024.

The crisis extends beyond India, with countries like Bangladesh also vulnerable to the economic fallout. The entire region is at risk, and the economic impact could be significant, as highlighted by Fitch Ratings.

The Red Sea crisis, beyond being a security challenge, is testing the resilience of the Indian economy. The world watches closely as nations grapple with the repercussions of this unfolding global event.

Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost’s views.

Read all the Latest News, Trending News, Cricket News, Bollywood News,
India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.