By: Mayar Hany
Researcher in International Affairs
Since mid-November 2023, the Red Sea has witnessed increasing tensions due to threats from the Yemeni Houthi militia, affecting maritime navigation, against the backdrop of Israeli escalation in Gaza. This has led to the fastest maritime route connecting Asia to Europe via the Suez Canal becoming an unsafe passage, And forcing shipping vessels to diversify their trade routes by transiting around the longer and more costly Cape of Good Hope route. This has led to significant repercussions on global trade since the COVID-19 pandemic, posing a threat to the geostrategic and geoeconomic interests of nations worldwide, and particularly to India.
Therefore, the increasing disturbances in the region raise a series of questions about their impact on Indian interests and the interpretation of India’s stance on the Red Sea crisis, as follows:
Indian Interests
The escalating tensions in the Red Sea region have threatened Indian interests in several ways, as follows:
First – The impact on the security of Indian naval vessels:
The Houthis initially announced their targeting of ships directly linked to Israel. However, they escalated their attacks by targeting vessels of countries they deemed to be “providing support” to Israel. Despite India’s official neutral stance on the Israeli-Palestinian conflict, it found itself directly drawn into the crisis due to its strong relations with Israel. That occurred when the Houthis seized a commercial ship bound for Pipavav, in the Indian state of Gujarat. Additionally, the ship MV Chem Pluto, which was berthed at the port of Mangalore, was subjected to a missile attack. Furthermore, a ship flying the flag of Gabon and carrying an Indian crew came under attack using drones just 200 nautical miles off the Indian coast.
Second – Disrupting vital trade routes:
India heavily relies on this route for its trade with Europe, the Middle East, and Africa. To avoid maritime attacks by the Houthis, many shipping lines have redirected their vessels away from the Red Sea. According to the Federation of Indian Export Organizations, nearly 90% of shipments to and from India in the Western Hemisphere are now being rerouted to the southern tip of Africa via the Cape of Good Hope, increasing travel distances and making logistics services more costly.
Third – the negative repercussions on Indian trade:
According to an assessment conducted by the RISDC research center based in New Delhi, the rise in shipping costs and delays in cargo arrival may reduce India’s exports by 6.9% or cost India around $30 billion in the current fiscal year. Regarding trade between India and Europe, the average prices for short-term contracts from JNPT port to Rotterdam have increased to $3750 per 40-foot container, up from $650, representing a 477% increase between the end of January 2023 and the end of January 2024. Prices for shipments from Rotterdam to the west coast of India have also risen to $3750 from $1050, while the average prices in January for shipments of 40-foot containers from the west coast of India to the east coast of the United States (New York) have increased to $4650 from $1900 in December 2023. For Indian shipments to the west coast of the United States (Los Angeles), prices now stand at $4150, up from $1900.
A report from the Indian Global Trade Research Initiative (GTRI) indicates that Indian exports are suffering from a significant increase in shipping costs. In the agricultural sector, exporters of Basmati rice are facing shipping costs that have increased by 233%. Furthermore, shipment delays present challenges for exporters of perishable goods such as grapes. In the industrial sector, the Indian pharmaceutical industry has been impacted by delays in supplying life-saving drugs, endangering essential medical supplies. Delays in exporting the steel industry to the Middle East and Europe raise concerns about potential order cancellations. Additionally, the Indian automotive sector is affected by increased shipping costs for imported raw materials like metals, glass, and rubber, as well as delays in delivering vital components such as engine parts, semiconductors, and tires.
Fourth – The negative effects of rising oil prices:
India heavily relies on imports to meet its energy needs, which account for over 80% of its petroleum resources. In 2022-23, there was a 9.4% increase in petroleum imports, following a 31% increase in 2021-22, along with growing demand for petroleum products. With heightened geopolitical tensions in the oil-rich Middle East region, concerns are mounting over global oil price hikes following ongoing threats from the Houthis. Brent crude oil prices surpassed $80 per barrel after the United States and the United Kingdom conducted military actions against the Houthis in Yemen before retracting to around $78 per barrel at the current time. Consequently, if the conflict in the region persists, it will impact global oil prices, thereby affecting the Indian economy.
A Balanced Approach
India’s response to the volatile security situation in the Red Sea has been multifaceted, summarized as follows:
First – Resorting to diplomacy:
India highlighted, during the visit of the Indian Foreign Minister to Iran on January 15th, the growing tensions threatening maritime navigation in the Red Sea, mentioning India’s concerns about certain attacks and their direct impact on its vital interests, and affirming that this unsettled security situation is not in favor of any party. According to a press release issued by the US Department of State before the visit, Foreign Minister Jaishankar had a phone call with his American counterpart, Antony Blinken, where both sides expressed “shared concerns about the reckless Houthi attacks in the southern Red Sea and the Gulf of Aden.” Therefore, this diplomacy reflects New Delhi’s tightrope balance between Iran and the United States. Additionally, the situation in the Red Sea was part of the discussions between Prime Minister Modi and French President Emmanuel Macron during his official visit to India on January 25th and 26th.
Second – increasing maritime presence in the region:
The Indian Navy responded to the volatile and rapidly evolving situation in the region by increasing levels of deployed force in the central/northern Arabian Sea. This included deploying unmanned aerial vehicles, patrol aircraft, naval patrols, guided missile destroyers, and frigates to enhance maritime surveillance efforts in India’s exclusive economic zone. Additionally, the Indian Navy worked in coordination with coast guards and national maritime agencies to closely monitor the overall situation. Furthermore, it conducted one of the largest exercises in the Arabian Sea on January 10th, which involved the coordinated deployment of over 35 aircraft.
Third – Avoiding any Multilateral Initiative:
India refrained from joining the multination coalition led by the United States called “Operation Guardian of Prosperity,” which was announced on December 18, 2023, to enhance maritime security specifically in the Red Sea region. Despite invitations from the United States, India’s negative stance sparked opposing reactions, as it was seen as needing to participate in efforts to protect the sea lanes, including working with the United States and other countries to provide an effective response. On the other hand, India deployed a group of naval ships to the region on its own initiative.
Fourth – Redrawing Indian Trade Routes:
Several steps have been taken to mitigate the repercussions of the crisis on India’s interests in the region. These steps include redirecting ships via the Cape of Good Hope route, tightening security measures, and establishing an internal strategic group within the Ministry of Commerce. This group is tasked with discussing global issues affecting the country’s trade on a daily basis and preparing a strategy for a swift and decisive Indian response.
In summary, India’s response to maritime threats is a balanced one, characterized by a strategy of wait-and-watch, allowing New Delhi to assess the evolving situation accurately. This approach provides the time and space to respond in a manner that maximizes its own interests. Ultimately, the crisis in the Red Sea serves as a reminder that India’s policy towards the Middle East region is likely to remain flexible and pragmatic, adapting to changing circumstances as needed.
