The war between Israel and Hamas, which started a year ago, has now spread to large parts of the Middle East. The scope of the war has extended to Lebanon and Iran. This unrest in the Middle East is worrying for India. There are continuous fluctuations in the prices of crude oil. Experts say that if crude oil increases to $ 10 per barrel, then inflation in India will increase by 0.5 percent. Because India imports about 80 percent of its crude oil needs. It is clear from the increase in prices that the cost of transportation of every item at national and international level will increase.
Dr. Ajay Sahay, Director General and CEO of Federation of Indian Exporters Organization (FIEO), says that India is a major trading partner with the countries of the Middle East. It is rapidly growing its trade relations with Saudi Arabia, UAE, Qatar, Bahrain, Kuwait and Oman, members of the Gulf Cooperation Council (GCC). An FTA has also been signed with the United Arab Emirates, which has come into force. India trades with the Gulf countries worth US$200 billion annually, of which exports are less than US$100 billion and imports are more than US$100 billion.
Increase in air expenses
The airspace of Russia and Ukraine was already closed to flight services. Now air flight service is also closed in the area between Iran and Israel, due to which the planes have to take long detours. Due to this, the cost of traveling from India to Gulf countries and Europe has increased. Dr. Ajay Sahay says that if the ongoing conflict between these two regions of the world does not end, India will also be adversely affected.
India’s expenditure also increased
Experts also believe that the conflict in the Gulf is very costly for India. On one hand, the ships have to take long trips to transport goods, while in the midst of war, the Merchant Navy has to monitor a large part of the security of the ships carrying goods, on which crores of rupees are being spent every day. . An official says that in a war situation, when a ship has to travel a long distance, the risk of attack by Houthis and other pirates increases. Therefore surveillance has had to be increased. Additional ships of the Navy had to be stationed for surveillance.
Tension in Red Sea increases freight cost
India’s trade with Gulf countries and Europe is done through the Red Sea. Goods are transported through this route. Till a year ago, Houthi rebels were active in the maritime area around Yemen, but the war situation has affected a large part of the Red Sea. Due to logistics challenges, the country’s exports were affected in August and it declined by 9.3 percent.
Now shipping companies are using long sea routes passing through the Horn of Africa and the Cape of Good Hope (Southern Africa) to transport goods to Europe. On the other hand, bringing Russian crude oil from the east coast and through the Strait of Malacca will lengthen the trade route.
Their exports may be affected
Gems and jewellery, precious metals, engineering goods, readymade garments, machinery including computers, fruits, vegetables and groceries, organic chemicals, electrical machinery/equipment, iron, steel and medicines.
