Representatives from various ministries and exporters are set to convene with top officials of India's commerce ministry on Friday to deliberate upon the ramifications of the ongoing Red Sea crisis on Indian exporters.
A source familiar with the matter revealed that the meeting, presided over by commerce secretary Sunil Barthwal, aims to strategize responses to the challenges posed by the crisis.
This gathering marks the third such meeting called by the government since the crisis erupted in November last year. The crisis unfolded following drone and missile assaults on commercial vessels in the southern region of the Red Sea by Yemen's Houthi group. Consequently, numerous shipping companies have halted operations in the area, opting for longer routes to destinations in the Middle East and Europe. This shift has substantially escalated transport costs, adversely affecting Indian exporters.
The Red Sea corridor is globally recognized as one of the busiest transit points for cargo, facilitating approximately 12% of international merchandise trade. Significantly, a substantial portion of Indian exports destined for Europe and West Asia traverses through this corridor.
In April 2023, the World Trade Organization (WTO) had forecasted a 1.7% growth in merchandise trade volumes for that year. However, with disruptions in the Red Sea region coupled with a broader global economic deceleration, the actual increase is expected to be less than 0.8%. Ngozi Okonjo-Iweala, the Director-General of the WTO, highlighted this disparity during the 13th Ministerial Conference (MC13) in Abu Dhabi last week.
Despite these challenges, the WTO maintains its projection of a 3.3% growth in global trade for 2024. Okonjo-Iweala disclosed that the organization is currently preparing an updated global trade forecast, slated for release in March, which will provide further insights into the evolving trade landscape.
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