Shipping costs are likely to increase up to 60 per cent and insurance premium 20 per cent because of the Red Sea crisis, a report by economic think tank GTRI said.
This conflict could also result in delays due to rerouting up to 20 days more and potential cargo loss from piracy and attacks.
The situation around the Bab-el-Mandeb strait, a crucial shipping route connecting the Red Sea and the Mediterranean Sea to the Indian Ocean, has escalated due to recent attacks by Houthi militants.
Due to these attacks, the shippers are taking consignments through the Cape of Good Hope, resulting in delays of about 20 days.
The Houthi conflict's disruption of the shipping lanes significantly impacts Indian trade, especially with West Asia, Africa and Europe, the Global Trade Research Initiative (GTRI) said.
"India must brace for an extended period of shipping disruptions in the Bab-el-Mandeb strait. This requires a strategic blend of diplomatic, economic, and humanitarian measures to safeguard its interests. The situation demands a nuanced approach, balancing immediate needs with long-term geopolitical and economic considerations," GTRI co-founder Ajay Srivastava said.
It said that India, heavily reliant on Bab-el-Mandeb for crude oil and LNG imports and trade, faces substantial economic and security risks from any disruption.
