How escalating Red Sea crisis poses billions of dollars of risk for India
Al Jazeera
New Delhi, India – Demand for India’s Basmati, the long-grain aromatic rice, from traditional buyers in the Middle East, the US and Europe has dropped as it has become costly. The reason is the escalating tensions in the Red Sea, the shortest and most efficient trade route for ships moving from Asia to Europe.
Attacks by Iranian-backed Houthis from Yemen on commercial vessels passing through the Red Sea have forced shippers to avoid one of the world’s most crucial trade routes. The alternative longer route around the Cape of Good Hope on the southern tip of Africa has added more than 3,500 nautical miles (6,500km) to the journey and close to a half-month of sailing time to each trip, significantly increasing shipping costs.
Exporting Basmati from India has become a challenge for shippers as freight costs have shot up as high as five times with an increase in insurance premiums, shortage of containers and longer transit time, said, Vijay Kumar Setia, director of Chaman Lal Setia Exports Ltd and former president of the All India Rice Exporters’ of India.
Part of the inventory is lying at various ports or processing units, while some stock is now being sold in the domestic market, resulting in a fall in prices by about 8 percent in the local market.
India, the world’s biggest rice exporter, ships over 4.5 million tonnes of basmati rice out of the country annually. About 35 percent of about 7.5 million tonnes of production is shipped to Europe, North America, North Africa and the Middle East through the Red Sea.
