NEW DELHI, Feb 6 : A high-level inter-ministerial committee will again meet on February 8 to discuss the way forward on the trade front in the wake of ongoing problems in the Red Sea, an official said.
Earlier the panel held its meeting on the issue on January 17 here.
Senior officials from five ministries — external affairs, defence, shipping, finance (department of financial services), and commerce — are expected to participate in the deliberations.
“In the February 8 meeting, the officers are expected to talk about steps being taken by them to help the exporting community deal with this crisis,” the official said.
These meetings are convened by the commerce ministry.
In the last meeting, the commerce ministry had asked the Department of Financial Services (DFS) to monitor and maintain credit flow to exporters, who are facing freight cost troubles due to the Red Sea crisis.
Meanwhile, the finance ministry on Monday asked banks and insurance companies to expeditiously resolve issues of exporters and facilitate overseas trade.
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 cost of moving it around becomes expensive.
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 exports by providing them with credit insurance covers.
The trade route of Bab-el-Mandeb Strait, the Suez Canal, and the Red Sea is shorter and faster than the Cape of Good Hope route, making it the preferred option for most shipping companies.
The route starts from major Indian ports like Mumbai, JNPT, or Chennai, heads westward through the Arabian Sea, enters the Red Sea, and navigates through the Suez Canal into the Mediterranean Sea. From there, ships can reach various European ports, depending on their destinations.
The Cape of Good Hope route is longer and slower, but it avoids the potential for delays or disruptions in the Suez Canal. It is typically used for bulk cargo shipments where time is less critical or when political instability in the Middle East raises concerns about using the Suez Canal.
The route starts from the same Indian ports, heads southward across the Indian Ocean, rounds the Cape of Good Hope at the southern tip of Africa, and then sails northward along the west coast of Africa before entering the Mediterranean Sea and reaching European ports.
On February 2, Minister of State for Commerce and Industry Anupriya Patel had informed the Parliament that the Red Sea crisis at present has not affected the availability of containers for traders and the government is closely monitoring the situation.
She had said that exports from India are continuing as the sailings of containers carrying ships from India have been diverted via the Cape of Good Hope route, encircling Africa. (PTI)
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