Red Sea Crisis and its impact on India.

18 Jan 2024 Red Sea Crisis and its impact on India.

Source – The Hindu.

 General Studies – International Relations, Panama Canal and Red Sea, Red Sea Trade Route, Suez Canal, Houthi Rebels, Ben Gurion Canal Project, Cape of Good Hope, Importance of Maritime Transport in Global Trade, Major Issues in Red Sea and Panama Canal, Challenges to internal security through communication networks, India and its neighboring countries, MV Chem Pluto.

Why in the News ?

• Nowadays, the attacks of Houthi rebels in the sea extending from the Northern Indian Ocean to the Red Sea have increased significantly in number and in their ferocity. Recently two Indian commercial ships have also been attacked. Recent attacks on ships in the Red Sea trade route and the ongoing drought in the Panama Canal have raised concerns about global trade disruptions. Insecurity and instability caused by attacks on commercial ships have forced cargo ships to abandon the Red Sea route, with ships now abandoning this route and opting for the longer voyage via the Cape of Good Hope. The world’s largest shipping companies are avoiding the Red Sea and the Suez Canal following an increase in attacks by Iran-backed Houthi rebels.

Importance of Red Sea in maritime trade route :

• The Red Sea, connecting the Mediterranean Sea and the Indian Ocean through the Suez Canal, is approximately 2000 km long. Has spread in. The Suez Canal saves both time and resources because earlier ships plying between Europe and Asia had to go through the Cape of Good Hope in South Africa.

Introduction to Houthi rebels :

• The Houthis are Yemeni rebels belonging to the Shia sect of Islam, who control the northern part of Yemen. Mainly the basis of their protest has been against ships belonging to Israel, but in recent incidents they have also targeted ships of other countries.
• Their main objective has been to increase the influence of Zairi Shias and reduce the influence of Sunni Muslims who follow Hadith.

Main  issue related to the Red Sea :

• Recently, MV Chem Pluto tanker loaded with chemical substances was attacked by a drone in the south-west, about 217 nautical miles off the Berawal coast of Gujarat.
• The Japanese-owned and Netherlands-operated MV Chem Pluto is a chemical tanker that began its journey carrying crude from Al Jubail in Saudi Arabia and was expected to reach New Mangalore, India. It is also believed that the Houthi rebels carried out this incident in protest against the military attack by Israel in Gaza. Houthi rebels have also been involved in a decade-long civil conflict with the Yemeni government.
• Due to the recent difficulties or attacks on the Red Sea sea route, there is a possibility of a 10 – 20% increase in the price of Indian agricultural products if sea transport is now carried out through the Cape of Good Hope.
• The recent difficulties or attacks or blockage in the Red Sea sea-transport sea route are bound to cause difficulties and concerns for Indian oil importers and Indian exporters of major commodities like Basmati rice and tea.

Important fact: Although the global flow of oil and petroleum has declined due to the world’s major shipping companies not trading through the Red Sea route, despite all these obstacles, oil imports from Russia to India are completely unaffected Used to be.

Why is it important that the Panama Canal system dries up ?

• The naturally occurring El Niño climate pattern related to warmer than normal sea waters in the central and eastern tropical Pacific Ocean is contributing to Panama’s drought. As a result, due to drought conditions, the 51-mile expansion of the Panama Canal has reduced the maritime transport route by more than 50%.
• This lack of Panamanian waters is forcing ships sailing from Asia to the Americas to opt for the Suez Canal, which takes an additional six days compared to the Panama Canal route.
• The Bab-el-Mandeb Strait connects Asia to Europe, leading to the Suez Canal in the Red Sea region, while the 100-year-old Panama Canal connects the Pacific Ocean and the Atlantic Ocean.
• Both the Panama and Suez Canal are among the busiest waterways in the world.

Current Problems :

Red Sea transport route becoming unsafe :

• Attacks by the Houthi militia have made the traditional maritime transport route through the Suez Canal in the Red Sea extremely unsafe.
• Merchant and cargo ships now travel through long routes such as the Cape of Good Hope, which increases shipping costs and delivery times, increasing the price of goods. 

Impact on Indian business and trade :

• Due to the Red Sea crisis, about 90% of India’s cargo bound for Europe, the US East Coast and North Africa is now routed through the Cape of Good Hope route.
• Various buyer-seller contracts (FOB, CIF, C&F) affect the distribution of freight burden, thereby affecting the movement of consignments.
• Increase in freight costs: Freight costs have increased significantly, in some cases up to six times, affecting all consignments, especially low value, high volume cargo and perishable goods. Around 20-25% of perishable goods consignments are being held up, mainly impacting low-value and high-volume cargo and perishable goods.
• Increased import costs: Imports can become expensive due to long transit times and distress and may require better inventory management.
• Impact on fuel prices: Given the country’s high dependence on crude oil and petroleum product imports, the crisis could impact India’s plans to reduce fuel prices.
• Tanker market dynamics: Despite increases in freight rates for the affected routes, there has been no widespread diversion of tankers.
• Consideration of alternative trade routes: Recently, there has been renewed interest in the Ben Gurion Canal project, a proposed 160-mile-long sea-level canal that would connect the Mediterranean Sea to the Gulf of Aqaba, bypassing the Suez Canal.

Operation Samridhi Patron :

• US Defense Secretary Lloyd Austin announces the launch of Operation Prosperity Guardian to protect commerce in the Red Sea. The operation was launched following missile and drone attacks by Yemen’s Iran-backed Houthis.
• Countries participating in the operation: UK, Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles and Spain.
• Joint Patrol: The participating countries will jointly conduct anti-piracy patrols in the Southern Red Sea and the Gulf of Aden.

​International cooperation :

• The United Nations condemned Houthi attacks on freedom of navigation, stressing the need for global support.
• US urges to support ‘Operation Prosperity Guardian’ to ensure open and fear-free sea lanes.

National response :

• At present, India is closely monitoring the current situation. Along with this, India is also engaged in discussions at the official and trade body level.
• India is also moving towards exploring diplomatic solutions for maritime security and cooperating with countries affected by piracy.
• India should talk to Iran for the security of its cargo ships.
• At present, India has alerted its Navy and deployed destroyers and warships in the Red Sea, Gulf of Aden, Central and North Arabian Sea. The task force has increased maritime surveillance. Instructions have been issued to the Navy to take action. The Indian Navy should stand more strongly in this effort. It can be hoped that this problem can be solved soon through multinational coordination.

Importance and role of maritime transport in global trade :

• According to the United Nations Conference on Trade and Development (UNCTAD), maritime transport accounts for 80% of global trade by volume and more than 70% by value, far more than other modes of transport and is the cheapest mode of transport. is also.
•  According to an estimate, the total value of annual world transport trade exceeds US$14 trillion.
• The shipping business contributes about 3% of global greenhouse gas emissions. From an environmental perspective, it is relatively more fuel-efficient and has lower emissions per tonne of cargo than other modes of transport such as air freight. Which is also favorable from an environmental point of view.
• Most of the world’s energy resources, such as oil and natural gas, are transported by sea. Tankers transport these resources from production areas to consumer areas, playing an important role in meeting global energy demands. Hence, the importance of maritime transport in global trade is also linked to the cheap transportation cost of energy sources.

conclusion :

• The Red Sea crisis is having far-reaching consequences for India’s internal and external trade, creating challenges such as increased shipping costs, delayed deliveries and potential disruption of critical imports.
• India should move towards a joint maritime security initiative by proposing a collaborative security framework with key Red Sea stakeholders (Egypt, Saudi Arabia, UAE, Yemen) including intelligence sharing, coordinated patrolling and joint exercises , a joint maritime security team should be formed. With this, piracy on the Red Sea sea route can be tackled.
• India should deploy advanced surveillance systems for early threat detection and associated security measures in the Red Sea maritime transport route as well as enhance capabilities to prevent piracy in India’s western seaboard. Integrated radar and drone surveillance systems can be installed on the coast.
• India should discuss toll exemption concessions for Indian vessels with the Panama Canal authorities and also interact with the Panama Canal authorities on possible toll exemptions for specific routes on the Panama Canal.

Practice Questions for Preliminary Exam :

Q. 1. Consider the following statements with reference to the Red Sea about the Sea – transport route.

1. Houthis are rebels living in Yemen belonging to the Shia sect of Islam.
2. The Bab-el-Mandeb Strait connects Asia to Europe.
3. According to UNCTAD, maritime transport contributes 80% of global trade in total transport volume.
4. The Cape of Good Hope is located between Australia and South America.

Which of the above statement /statements is correct ?

(A) Only 1, 2 and 3.

(B) Only 2, 3 and 4

(C ) Only 1 and 4.

 (D) All of these.

Answer – (A)

Practice Questions for Main Exam :

Q.1. Underlining the importance of maritime transport routes in global trade, discuss the various impacts of the current crisis in the Red Sea on India.

Akhilesh Kumar Shrivastava

Qualified Preliminary and Main Examination ( Written ) and Shortlisted for Personality Test (INTERVIEW)  three times Of UPSC CIVIL SERVICES EXAMINATION in the year of 2017, 2018 and 2020. Shortlisted for Personality Test (INTERVIEW) of 64th and 67th BPSC CIVIL SERVICES EXAMINATION.

M. A  M. Phil and Ph. D From (SLL & CS) JAWAHARLAL NEHRU UNIVERSITY, NEW DELHI.