Indian Government Urges ECGC to Maintain Stable Rates, Plans Stakeholder Meeting on January 17th to Address Red Sea Crisis
Published on: January 16, 2024.
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India’s exports of basmati rice and textiles have been impacted by the ongoing conflict in the Red Sea, as shipping vessels are forced to take a longer route around Africa’s Cape of Good Hope instead of using the Suez Canal. While India’s petroleum imports remain unaffected, the government has asked export promotion councils to provide information on the issues affecting them. The government has also decided not to raise rates of insurance for Indian exporters and has scheduled a meeting on January 17 to further discuss the situation.
Government sources have revealed that the cost of freight and insurance for shipments has increased due to the Red Sea conflict. Shipping companies and exporters have informed officials that the longer route has added 14 days to the turnaround time for shipments. The Ministry of Defence is providing security escort for many consignments traveling in high seas. Although there is currently a one-month inventory cushion for imported items, disruptions may occur in the future if the conflict continues.
The Commerce Ministry has acknowledged that higher freight costs and surcharges may impact trade as exporters are holding up consignments. However, the availability of containers has not been an issue so far. The ministry expects global cooperation to work towards a resolution and remains optimistic about achieving similar export levels as the previous year, despite conflicts in Europe and the Red Sea. India hopes that cost pressures faced by its competitors will balance out the cost escalation for Indian exporters. Currently, 95% of shipping vessels are taking the route via the Cape of Good Hope, while 80% of India’s trade with Europe passes through the Red Sea.
Source: [CNBCTV18.com](https://www.cnbctv18.com)
