India may see a decline of about $30 billion in its total exports in the current financial year because cargo ships are at risk. the Red Sea This increased container shipping rates and prompted exporters to halt shipments.
A preliminary assessment by the Research and Information System for Developing Countries, a New Delhi-based think tank, would imply a decline of 6.7%. Indian exportsBased on last fiscal year’s total of $451 billion.
“The crisis in the Red Sea will really hit India’s trade and could lead to further contraction,” said Sachin Chaturvedi, director general of the think tank.
The government has not released any official estimates on the impact of the Red Sea crisis on Indian exports.
The number of ships passing through the Suez Canal is about 44% lower than the average for the first half of December, according to Clarkson Research Services Ltd., a unit of the world’s largest ship broker. He said ships with a combined tonnage of about 2.5 million gross tonnes passed through in the week to January 3, compared with about 4 million tonnes at the beginning of last month.
Yemen’s Iran-backed Houthi militants have targeted ships passing through the Red Sea with missiles in recent weeks. The Houthis say they are pursuing all ships with ties to Israel.
For India, the Red Sea is a major shipping route to Europe, the East Coast of the US, the Middle East and African countries. Prime Minister Narendra ModiThe government is in discussions with export promotion councils to find ways to protect trade through this route, according to two officials familiar with the matter.
Last week, India sent a warship to the Arabian Sea where a Liberian-flagged ship said it was hijacked off the coast of Somalia. The Indian Navy said it “successfully salvaged” the ship.
The threats have forced Indian exporters to stop about 25% of outbound shipments going through the Red Sea, according to Ajay Sahay, director general of the Federation of Indian Export Organizations, which comes under India’s trade ministry.
“In many cases, both buyers and exporters are renegotiating contracts to accommodate rising freight charges,” he said.
Cargo booking and payments platform Freightos.com said on Wednesday that the spot rate to ship goods in a 40-foot container from Asia to Northern Europe is now above $4,000, up 173% from just before the diversion began in mid-December. is more. Rates for a 40-foot container from Asia to the East Coast of North America have increased 55% to $3,900.
India commonly exports a variety of goods including petroleum products, grains and chemicals using the Red Sea route. According to government data, exports in the current fiscal year are already on the rise, falling by 6.5% in the April to November period compared to a year earlier.
Disruptions in the Red Sea could hit margins in India’s oil and auto sectors, Madhavi Arora, chief economist at Emkay Global Financial Services Ltd., wrote in a note published Dec. 22. But the bigger concern could be inflation, which is above the central level. The bank’s comfort zone since the end of 2019 is 4%.
“Higher global freight and insurance rates, potential upside risks in oil and global trade and potential supply chain re-emergence will mean cost increases will lead to inflationary pressures,” he said.
A preliminary assessment by the Research and Information System for Developing Countries, a New Delhi-based think tank, would imply a decline of 6.7%. Indian exportsBased on last fiscal year’s total of $451 billion.
“The crisis in the Red Sea will really hit India’s trade and could lead to further contraction,” said Sachin Chaturvedi, director general of the think tank.
The government has not released any official estimates on the impact of the Red Sea crisis on Indian exports.
The number of ships passing through the Suez Canal is about 44% lower than the average for the first half of December, according to Clarkson Research Services Ltd., a unit of the world’s largest ship broker. He said ships with a combined tonnage of about 2.5 million gross tonnes passed through in the week to January 3, compared with about 4 million tonnes at the beginning of last month.
Yemen’s Iran-backed Houthi militants have targeted ships passing through the Red Sea with missiles in recent weeks. The Houthis say they are pursuing all ships with ties to Israel.
For India, the Red Sea is a major shipping route to Europe, the East Coast of the US, the Middle East and African countries. Prime Minister Narendra ModiThe government is in discussions with export promotion councils to find ways to protect trade through this route, according to two officials familiar with the matter.
Last week, India sent a warship to the Arabian Sea where a Liberian-flagged ship said it was hijacked off the coast of Somalia. The Indian Navy said it “successfully salvaged” the ship.
The threats have forced Indian exporters to stop about 25% of outbound shipments going through the Red Sea, according to Ajay Sahay, director general of the Federation of Indian Export Organizations, which comes under India’s trade ministry.
“In many cases, both buyers and exporters are renegotiating contracts to accommodate rising freight charges,” he said.
Cargo booking and payments platform Freightos.com said on Wednesday that the spot rate to ship goods in a 40-foot container from Asia to Northern Europe is now above $4,000, up 173% from just before the diversion began in mid-December. is more. Rates for a 40-foot container from Asia to the East Coast of North America have increased 55% to $3,900.
India commonly exports a variety of goods including petroleum products, grains and chemicals using the Red Sea route. According to government data, exports in the current fiscal year are already on the rise, falling by 6.5% in the April to November period compared to a year earlier.
Disruptions in the Red Sea could hit margins in India’s oil and auto sectors, Madhavi Arora, chief economist at Emkay Global Financial Services Ltd., wrote in a note published Dec. 22. But the bigger concern could be inflation, which is above the central level. The bank’s comfort zone since the end of 2019 is 4%.
“Higher global freight and insurance rates, potential upside risks in oil and global trade and potential supply chain re-emergence will mean cost increases will lead to inflationary pressures,” he said.
