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Mains Practice Questions

  • Q. How has the Red Sea crisis impacted global trade and India's maritime interests? Examine. (150 words)

    22 Oct, 2024 GS Paper 2 International Relations

    Approach

    • Introduce the answer by the mentioning the Red Sea crisis
    • Give me impact of Red Sea Crisis on Global trade
    • Highlight the impact of Red Sea Crisis on India
    • Conclude suitably.

    Introduction

    The Red Sea, a vital maritime choke point, has witnessed increasing tensions in recent years, with the Houthi rebels in Yemen posing significant threats to commercial shipping. This crisis has had far-reaching implications for global trade and India's maritime interests.

    Body

    • Impact on Global Trade:
      • Disruption of Supply Chains: The Red Sea is a crucial route for global trade, especially between Asia and Europe.
        • Attacks on commercial vessels have led to delays, rerouting, and increased insurance premiums, disrupting supply chains and raising costs for businesses worldwide.
        • Major shipping companies like Maersk rerouted vessels around Africa's Cape of Good Hope in January 2024, adding 10-14 days to journey times
      • Increased Freight Rates: The heightened risk to shipping has forced carriers to adopt more cautious measures, including slower speeds and increased security.
        • This has resulted in higher freight rates, which are passed on to consumers in the form of increased prices.
        • Also, the cost of insuring a ship through the Red Sea has more than doubled since the start of September 2024.
      • Energy Security Concerns: The Red Sea is a major oil transit route, and disruptions in the region can impact global energy markets.
        • Attacks on tankers carrying crude oil or refined products can lead to supply shortages and price volatility.
        • Oil tanker "Marlin Luanda" was attacked in January 2024, causing temporary suspension of shipments by several major oil companies
    • Impact on India's Maritime Interests:
      • Energy Security: India is heavily reliant on oil imports, and a significant portion of its crude oil passes through the Red Sea.
        • The crisis has increased India's vulnerability to supply disruptions and price fluctuations.
      • Trade Routes: The Red Sea is a key trade route for India, connecting it to Europe, Africa, and the Middle East.
        • Disruptions in the region can impact India's exports and imports, particularly of essential commodities.
        • Freight rates at Indian ports have increased by nearly 70% year-on-year in August 2024 due to global shipping disruptions
      • Security Concerns: The crisis has highlighted the importance of maritime security for India.
        • The Indian Navy intensified anti-piracy efforts, with the offshore patrol vessel INS Sumitra successfully foiling a piracy attempt on FV Iman in January 2024.

    Conclusion

    The Red Sea crisis has had a significant impact on global trade and India's maritime interests. The disruption of supply chains, increased freight rates, and energy security concerns have posed significant challenges to businesses and governments worldwide. India has responded by increasing its naval presence, engaging in diplomatic efforts, and diversifying its trade routes.

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