Red Sea attacks threaten to inflate India’s export costs

As shipping companies avoid the Suez Canal route due to Houthi Group attacks on cargo ships in the Red Sea, Indian exporters estimate freight charges to jump by up to 25%, as will insurance premiums. They also believe that if the disruption continues for an extended period of time, trade will suffer severely.

The continuation of the onslaught by Iran-backed rebels could further fuel imported inflation and raise capital goods and raw material costs for Corporate India, which is on the verge of a new investment cycle.

Any incremental increase in inflation caused by the Red Sea occurrences could cause concern for the Reserve Bank of India, which has managed to keep "core inflation" under control but is concerned about "uncertain food prices."

The news could not have come at a worse time for India, considering that the country's merchandise exports fell in six of the first eight months of the current fiscal year, and the export value fell by 5% in 2023.

According to export import data, Indian shipments to specific nations in Asia, North America, Africa, and Europe that transit through Suez will now have to take a longer route through the Cape of Good Hope, adding 12–14 days to the journey time.

Source: https://www.financialexpress.com/