Prime Minister Narendra Modi called an urgent meeting of the Cabinet Committee on Security – the government’s highest decision-making body – on the crisis in West Asia.
The committee comprising the Prime Minister, Home Minister, Defense Minister, External Affairs Minister, Finance Minister and National Security Advisor discussed in detail the fresh hostilities in the Middle East and the sharp escalation following Iran’s ballistic missile attack on Israel.
Describing recent developments in West Asia as “deeply worrying”, the country’s Supreme Committee deliberated on various issues arising from the ongoing and escalating crisis.
Among several key issues, they discussed the impact on trade, navigation and supply chains – particularly the supply of oil, petroleum and its products.
India has urged all parties involved in the conflict to immediately address all issues through diplomacy and dialogue. New Delhi has also said that the ongoing conflict “should not take on broader regional dimensions.”
Impact on maritime trade and supply chains
Any conflict not only affects those who are involved in it, but also has consequences for the rest of the region and even the world. With tensions between Iran and Israel intensifying, India is bracing for widespread trade disruptions on key Red Sea and Gulf of Aden routes.
The conflict could significantly increase cargo freight charges as Lebanon’s Iran-backed Hezbollah militants have close ties to the Houthi rebels in Yemen, who have been targeting merchant ships and vessels carrying cargo through the Red Sea and the Gulf of Aden. Are responsible for most of the attacks.
The Red Sea crisis began in October last year, when the Iran-backed Houthi militia disrupted global trade in the region. For India alone, this impacted petroleum exports, which fell 37.56 per cent to $5.96 billion in August this year from $9.54 billion in the same month last year.
According to 2023 data, the Red Sea Route after the Suez Canal accounts for 50 per cent of India’s exports – worth Rs 18 lakh crore and 30 per cent of its imports – worth Rs 17 lakh crore.
India’s total merchandise trade (exports and imports combined) was Rs 94 lakh crore in FY 2013, of which 68 percent (in value terms) and 95 percent (in volume terms) were shipped by sea.
India also trades heavily with Gulf countries. According to the latest government data, the Gulf Cooperation Council or GCC now contributes 15 per cent to India’s total trade, and sectors such as energy, defence, security and health are growing rapidly in the region. Bilateral trade between India and Gulf Cooperation Council countries reached $162 billion last year.
