Officials from ministries of finance, shipping as well as commerce and industry on February 7 discussed problems being faced by exporters due to the Red Sea crisis and the commerce ministry suggested sharing specific matters for their resolution, an official said. The official also said that so far there is no adverse impact on the country’s exports due the crisis so far.
However, according to exporters, the impact is likely to figure in the numbers of March-April.
At present, exporters are executing their old orders and the impact could be visible when they would start getting new export orders, they said.
All the stakeholders, including export promotion councils, federation of Indian export organisations (FIEO), shippers, and freight forwarders attended the deliberations. Commerce Secretary Sunil Barthwal chaired the meeting.
The commerce ministry asked FIEO to coordinate with all the councils and share the problems “with us and and those issues can be discussed in weekly meetings with commerce, and finance,” the official added.
When asked about the meeting, FIEO Director General Ajay Sahai said that freight rates have jumped multiple times.
Countries that are not impacted from the crisis such as South Africa and Turkey may get business “which we may lose”, an exporter said.
The exporting community has urged the commerce ministry to intervene in freight rates as the shippers are charging huge amounts.
“High freight rates are impacting the exporting community. We are at dis-advantageous position as compared to countries which are not getting impacted from the crisis,” Sahai said.
The situation around the Bab-el-Mandeb Strait, a crucial shipping route for traders connecting the Red Sea and the Mediterranean Sea to the Indian Ocean, has escalated due to attacks by Yemen-based Houthi militants in December 2023.
Because of this, the shipping costs have jumped and the consignments are taking more time to reach Europe and the US as the ships are taking the Cape of Good Hope route, encircling Africa.
Longer routes are resulting in delays of about 14-20 days and also higher freight and insurance costs.
Exporters are apprehensive that the crisis may cause some trade disruption because the increased transportation cost.
The commerce ministry has also asked the ECGC not to increase the export credit interest rates.
State-owned ECGC is an export promotion organisation, seeking to improve the competitiveness of Indian exporters by providing them with credit insurance covers.
The country’s exports edged up 1 per cent to $38.45 billion in December 2023 while the trade deficit narrowed to a three-month low of $19.8 billion.
Imports declined by 4.85 per cent to $58.25 billion in December last year due to a dip in crude oil shipments.
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