Escalation of conflict in the Middle East, with Iran directly targeting Israel, has sparked concerns among the exporters who fear the spike of air and shipping freight rates and trade impact worth $100 billion if the situation continues to prevail throughout the year.
Israr Ahmed, vice-president of the Federation of Indian Exports Organisation (FIEO), told The New Indian Express that the merchandise exports from India have been hit in August.
“Merchandise exports were hit by 9% of the total exports worth $34.7 billion due to geo-political tensions and other factors,” said Ahmed while raising concerns about the escalation of conflict between Israel and Iran on Tuesday. Last year during August, goods exports were $38,26 billion, as per data from the Union Commerce and Industry Ministry.
Due to escalated conflicts, both global and India’s international trade continue to face prolonged disruption, as the Red Sea shipping route may remain inaccessible to global shipping lines for a much longer duration than predicted, and freight rates may be kept high.
“This increasing conflict in the region is significant for India as we depend on this route through the Suez Canal for our exports to Europe, the US, Africa, and West Asia. Our export to the tune of $100 billion will get affected during this year if the situation continues,” says Ahmed.
A exporter on condition of anonymity, said that trade with Iran had taken a dip following the sanctions against Iran by the US. Tea, turmeric, and agricultural products among others are exported to Iran
via Dubai. Joint Director General of the Federation of Indian Exports Organisation K Unnikrishnan said the conflict would result in insurance premiums going up for shipping cargoes to Gulf countries.