Red Sea crisis may push up costs for traders, govt should consider financial help, says GTRI
New Delhi, January 6
The increasing Red Sea crisis may impact trade as it is expected to push shipping and insurance costs for exporters, and to deal with the situation the government should consider extending financial assistance to exporters, a report by economic think tank Global Trade Research Initiative (GTRI) said on Saturday.
It said the crisis could push shipping costs up to 60 per cent and insurance premium by 20 per cent. The GTRI said India must prepare for long-term shipping disruptions due to the current situation.
“The attacks by drones and missiles on merchant vessels have seen shipping costs and time to deliver a cargo go through the roof putting margins of exporters under severe pressure. The real problem is being faced by those whose contracts also included costs of delivering goods at buyers’ ports,” it added.
The report suggested steps such as diversifying crude oil imports from regions like West Africa, the Americas, and the Mediterranean; relying on ports outside conflict zones, like Oman and Djibouti, for transshipment and regional trade; and offering financial support and insurance schemes to Indian companies affected by trade disruptions.
The conflict could also result in increased shipping costs (40-60 per cent) and delays due to rerouting (up to 20 days more), and higher insurance premiums (15-20 per cent).
