Centre forms panel to monitor Red Sea crisis effect on India | Latest News India - Hindustan Times
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Centre forms panel to monitor Red Sea crisis effect on India

Jan 16, 2024 11:24 AM IST

Indian government has set up an interministerial group to monitor the crisis in the Red Sea, which is disrupting global trade, including shipments from India.

​New Delhi The Union government has set up an interministerial group anchored at the commerce ministry to monitor the crisis in the Red Sea, which is witnessing a violent regional spillover of Israel’s war with Hamas that is disrupting global trade, including shipments from India, officials said.

FILE PHOTO: Container ships sail across the Gulf of Suez towards the Red Sea before entering the Suez Canal, in El Ain El Sokhna in Suez, east of Cairo, Egypt, March 17, 2018. (REUTERS)
FILE PHOTO: Container ships sail across the Gulf of Suez towards the Red Sea before entering the Suez Canal, in El Ain El Sokhna in Suez, east of Cairo, Egypt, March 17, 2018. (REUTERS)

Most Indian exporters, including shippers of merchandise and basmati rice, are already taking a longer route to access European and Middle-Eastearn markets, going around the Cape of Good Hope, which has increased shipment costs, officials said.

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The interministerial committee, led by an additional secretary-level officer, met exporters and logistics providers last week to discuss plans to keep shipments going, Union commerce secretary Sunil Barthwal said. The committee consists of representatives from ministries of defence, shipping and external affairs.

ALSO READ- Jaishankar, Blinken discuss maritime security amid ‘reckless’ Houthi attacks in Red Sea

India’s exported inventories are enough to last a month, a key reason why the country’s exports and imports haven’t been seriously impacted but the situation in the Red Sea region is evolving on a “daily basis”, requiring constant vigil and updates, a second official said.

Yemen’s Houthi forces have been attacking cargo vessels in the Red Sea corridor in support of Hamas in Gaza, prompting the US and the UK to retaliate. The militia has said it will continue to attack vessels passing through the Red Sea in solidarity with Palestinians until Israel withdraws from Gaza. The disruptions have led to a drastic cut in the number of vessels using the Suez Canal route, a major artery for global trade.

The government is exploring ways to cushion increased logistics costs to Indian shippers. “India is prepared to respond quickly if the situation escalates and prolongs,” Union commerce minister Piyush Goyal said in a briefing on Saturday.

The government is talking to the Export Credit Guarantee Corporation Ltd to lower interest rate for exporters whose insurance costs have gone up because of the conflict, Barthwal said. The government is also planning alternative routes and looking at ways to reduce container costs for shipments.

ALSO READ- US-owned ship hit by missile off Yemen: What we know so far

In its latest report on global economic prospects, the World Bank says the West Asia crisis, with the war in Ukraine, “could disrupt trade, lead to surging energy prices, with broader implications for global activity and inflation”.

The disruption to trade is the most severe since the Covid-19 pandemic and has raised the costs of moving goods by sea to the highest levels recorded outside that period, according to a Financial Times report.

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  • ABOUT THE AUTHOR
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    Zia Haq reports on public policy, economy and agriculture. Particularly interested in development economics and growth theories.

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