The cost of Indian exports has skyrocketed as a result of the Yemeni Houthi militia’s attacks on ships in the Red Sea, industry officials revealed on Monday. According to government estimates, approximately 80% of India’s goods trade with Europe, valued at nearly $14 billion per month, typically traverses the Red Sea. However, exporters disclosed that 95% of vessels have been compelled to reroute around the Cape of Good Hope at the southern tip of Africa since the Houthi militants commenced their assault on shipping in November. This detour has added an extra 4,000 to 6,000 nautical miles and 14-20 days to journeys originating from India. Major shipping lines such as Maersk, MSC, and Hapag Lloyd have either ceased or temporarily suspended operations in the Red Sea. As a consequence of these developments, the cost of shipping a 24-foot container from India to Europe, the eastern coast of America, and the UK has surged from $600 to $1,500. This sharp increase in shipping expenses has eradicated profit margins for exporters, with buyers reluctant to accept price revisions. Arun Kumar Garodia, chairman of the Engineering Export Promotion Council of India (EEPC), lamented that the rising shipping costs and delivery delays would impact Indian exports worth a minimum of $10 billion in the fiscal year ending March 2024. Moreover, shipping companies have threatened to further escalate freight costs later this week. Exporters also reported that approximately 25% of this month’s exports are currently on hold due to shipping schedule disruptions. Satya Srinivas, a senior official from the Indian trade ministry, confirmed that the sailing of most ships has been significantly delayed, resulting in the postponement of incoming vessels with longer routes. While December exports, valued at $38.45 billion, were not affected by the Red Sea crisis, certain recent consignments have been put on hold.
Indian exports are encountering increasing costs due to the ongoing Houthi attacks in the Red Sea. These attacks have disrupted trade routes and led to rising insurance premiums, affecting India’s export industry. The Red Sea is a crucial passage for Indian shipments to Europe, Africa, and the Middle East, making it a vital trade route for the country. As a result, Indian exporters are facing challenges in maintaining competitiveness and profitability. This situation highlights the need for swift resolution to the conflict to ensure the smooth flow of Indian exports and minimize economic disruptions.
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Indian exports are increasingly burdened by rising costs due to Houthi attacks in the Red Sea.
