New Delhi, India – The rising tensions in the Red Sea have led to a drop in demand for India’s Basmati rice from traditional buyers in the Middle East, the US, and Europe. The attacks on commercial vessels by Iranian-backed Houthis from Yemen have forced shippers to avoid the Red Sea, resulting in longer shipping routes and increased costs.
Exporting Basmati rice from India has become a challenge as freight costs have skyrocketed, with insurance premiums increasing and a shortage of containers causing longer transit times. This has led to a decrease in prices in the local market as some stock is being sold domestically, affecting the profits of rice exporters.
The chaos in the Red Sea is not only impacting the rice industry but also disrupting shipments of other goods such as tea, spices, grapes, and buffalo meats from India. It is also causing delays in imports of fertilizers, sunflower oil, machinery components, and electronic goods, leading to potential higher costs for consumers. The unrest in the Red Sea has raised concerns about supply-chain disruptions, a contraction of trade, and a slowdown in food inflation.
India heavily relies on the Red Sea for its trade with Europe, North America, North Africa, and the Middle East. The disruption in the trade route is having significant consequences, with shipments being delayed by up to 28 days. The crisis could potentially cost the country more than $30 billion in exports for the fiscal year ending in March, marking a 6.8 percent decrease from the previous year.
The Houthi rebels’ missile and drone attacks on cargo ships in the Red Sea, which they claim are in response to Israel’s war on Gaza, have prompted the shipping industry to temporarily suspend Suez Canal transit. As a result, there has been a significant decrease in the number of tankers and cargo ships transiting through the Suez Canal, while voyages around the Cape of Good Hope have increased.
The disruptions in the Red Sea have also led to a surge in shipping prices, adding to the challenges faced by Indian exporters. For instance, the average price of transporting a 40-feet container has risen by 161 percent in just over a month. To address security concerns
