Impact of Houthi Attacks on Indian Shipping, Trade ,Imports and Exports

 The Iran-backed Houthi militia in Yemen has disrupted global trade flow with attacks in the Red Sea, causing significant ramifications on various sectors, particularly in India.

1.    Immediate Impact on Trade Sectors:

·         The Suez Canal, vital for 12% of global trade, is blocked due to hostilities, redirecting ships to pass through Africa.

·         Capital goods and fertilizers suffer the most significant impact, leading to delays, inventory buildup, and frozen order conversions.

2.    Impact on Fertilizer Sector:

·         India heavily relies on Middle Eastern countries like Israel and Jordan for fertilizers.

·         Extended shipment timelines and increased freight costs significantly affect fertilizer imports, particularly muriate of potash (MOP).

3.    Medium Impact Sectors:

·         Crude oil, pharmaceuticals, and shipping face medium-level impacts due to ongoing crises.

·         Elevated freight and insurance costs affect crude prices and shipping markets, impacting exports and domestic oil markets.

4.    Challenges for Pharma and Shipping:

·         Indian pharmaceutical exports, heavily reliant on the US and Europe, face potential delays and increased costs in delivering products through the disrupted Red Sea route.

·         Shipping freight rates spike globally due to Middle East tensions, affecting long-term shipping contracts.

5.    Long-term Implications 

·         Continued tensions and disruptions in the Red Sea could lead to significant long-term impacts on trade contracts and global shipping routes, necessitating strategic planning and adaptation for affected sectors.

By restructuring and sequencing the content, the flow of information is improved, making it easier to understand the immediate and long-term impacts of the Houthi attacks on Indian trade sectors.