Centre meets stakeholders to assess impact of Iran-Israel conflict on trade – OXBIG NEWS NETWORK-OxBig News Network

The Commerce Ministry on Friday held consultations with key stakeholders, including shipping lines, exporters, container firms, and other departments, to assess the impact of the Iran-Israel conflict on India’s overseas trade, an official said.

The meeting was chaired by Commerce Secretary Sunil Barthwal.

The participants informed that the situation in the Strait of Hormuz is currently stable and a ship reporting system is in place to monitor any incidents.

The freight and insurance rates are also being closely monitored, the official said.

The secretary emphasised the need to assess the evolving situation and its impact on Indian trade, the official said.

He highlighted the importance of exploring all possible alternatives in response to the situation. Exporters have stated that the war, if escalated further, would impact world trade and push both air and sea freight rates.

They have expressed apprehensions that the conflict may impact the movement of merchant ships from the Strait of Hormuz and the Red Sea.

Nearly two-thirds of India’s crude oil and half of its LNG imports pass through the Strait of Hormuz, which Iran has now threatened to close.

This narrow waterway, only 21 miles wide at its narrowest point, handles nearly a fifth of global oil trade and is indispensable to India, which depends on imports for over 80 per cent of its energy needs.

According to think tank GTRI, any closure or military disruption in the Strait of Hormuz would sharply increase oil prices, shipping costs, and insurance premiums, triggering inflation, pressuring the rupee, and complicating India’s fiscal management.

The present conflict that began with an attack on Israel on October 7, 2023 had brought cargo movement through Red Sea routes to a halt due to attacks by Houthi rebels on commercial shipping.

Around 80 per cent of India’s merchandise trade with Europe passes through the Red Sea, and substantial trade with the US also takes this route. Both these geographies account for 34 per cent of the country’s total exports. This sea is vital for 30 per cent of global container traffic.

Exporters urge shifting consignments to Chabahar from Bandar Abbas

Exporters have suggested shifting cargo movement from Bandar Abbas port to the Chabahar port, stating any further escalation in the war would severely impact trade with Afghanistan, Central Asia, and Russia, an industry official said on Friday. The official also said that the air freight rates have already seen a 15 per cent rise.

Although certain factors remain beyond control, in the current circumstances, focus on Chabahar Port — an Indian-managed port in Iran — could help the industry. There is connectivity via Dubai and direct linkage from Kandla Port. Basmati rice exports to Iran have reportedly stopped, and shipments to West Asia have become expensive.