Red Sea Security Crisis and Its Impact on India

GS II-International Relations

Strategic Importance of the Red Sea Route

• The Red Sea corridor serves as the shortest maritime route for trade between India and Europe.
• This passage facilitates approximately 12% of global trade and accounts for nearly 30% of worldwide container traffic.
• While the Cape of Good Hope route offers greater security, it comes with challenges such as higher insurance premiums, increased voyage duration (by 15-20 days), and elevated freight costs.
• Interestingly, Russian crude oil exports to India remain unaffected, as Russia is viewed as an ally of Iran, which provides support to the Houthis.

Impact on India’s Fuel Exports

• Declining European Exports: The Red Sea route contributes 24% of India’s exports and 14% of its imports. Due to Houthi disruptions, India’s petroleum exports declined by 25% between July-December 2023 and January-June 2024 (as per Kpler analytics).
• Diversion to Asian Markets: To counter the fall in European trade, India is shifting focus towards Asia and Australia, strengthening energy ties with these regions.