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To help Indian trade deal with the Red Sea crisis unleashed by the continued attacks of the Iran-backed Houthis on cargo ships in the region, top government officials discussed measures including easing export credit, keeping a check on insurance rates and increasing defence surveillance, a senior government official said.
Officials from MEA, Defence Ministry, Shipping Ministry and the Department of Financial Services (DFS) participated in a meeting chaired by Commerce Secretary on Wednesday to take stock of the situation in the Red Sea and how best to redress it.
“We are monitoring the situation closely. The Commerce Ministry asked the DFS to ease credit flow to exporters as their operating costs have gone up substantially. Officials also decided to take measures to ensure that insurance costs do not increase,” the official told businessline.
Diplomatic options
The MEA has said that it is exploring diplomatic options and holding talks with all countries linked to the crisis, the official said.
Minister of External Affairs S Jaishankar recently visited Iran where he reportedly discussed the Red Sea situation and its effect on Indian trade with his counterpart Hossein Amirabdollahian.
Impact on exports
There is an apprehension that India’s exports could decline by an estimated $30 billion in the on-going financial year if the Red Sea attacks continue. About $230 billion of India’s international trade with Europe, US east coast and parts of West Asia and Africa, takes place through the Red Sea, per industry calculations.
“Almost all the trade that was taking place through the Red Sea is now being diverted through the Cape of Good Hope which has resulted in increased transit time of about 14 days. The Shipping Ministry pointed out that while shipping costs have escalated, the volumes being shipped through all major ports have not declined. It will now keep a strict watch on volumes,” the official said.
The Defence Ministry has said that it has increased its surveillance in the Arabian Sea and put more mechanisms in place.
“The Inter-Ministerial group will meet again to further monitor the situation and take action,” the official said.
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