THE RED SEA CRISIS: IMPLICATIONS FOR THE INDIAN ECONOMY
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- THE RED SEA CRISIS: IMPLICATIONS FOR THE INDIAN ECONOMY
The Red Sea crisis began on 19 October 2023, when the Iran-backed Houthi movement in Yemen unleashed missiles and armed drones at Israel, requiring an end to the invasion of the Gaza Strip. Iranian-backed Houthi militants' attacks on vessels passing through the southern Red Sea have choked trade through the Suez Canal.
The Red Sea crisis continues to impact global trade adversely as commercial ships don’t have any other alternatives but to take routes of treacherous waters to evade potential threats posed by Houthi rebels of Yemen. Vessels don’t have any other alternatives but to opt for the longer route with delays in shipments with soaring sea freight costs. Space constraints and logistical challenges continue, worsening the stress on supply chains already struggling with the consequences of the crisis.
Trade through Suez and Panama Canal has declined severely, disrupting supply chain and trade. Globally salt exports got affected, groceries and food suppliers faced challenges in ingredient sourcing and transportation. Chemicals and fertilisers sectors also grasped with troubles.