In the eye of this crisis in the Red Sea, exporters have pleaded for assistance from the Union government to secure insurance policies on shipping commodities. As sources reveal, several private insurance companies have refrained from insuring shipping consignments on the route.
There is a problem rising in the form of insurance for exporters. Although freight rates have hiked more than two and a half times, getting an assurance policy has also become difficult.”
Many firms have increased the premium for insurance coverage, and various private insurers no longer provide coverage because of the absence of underwriting support. In recent months, Yemen-based Houthi rebels have attacked merchant ships passing through the Red Sea that usually connects Indian vessels to Europe and the east coast of the United States.
Ships are also being made to sail around the Cape of Good Hope due to these attacks that add both time and length. Rates of up to 1% of the ship’s value have been quoted by underwriters for ships passing through the Suez Canal and even vessels that travel around Cape Good Hope.
It is widely believed that exporters have raised the issue with the commerce ministry, which has convened many meetings to discuss it.
A high-level inter-ministerial committee under the chairmanship of Commerce Secretary Sunil Barthwal, joined by representatives from ministries in charge of external affairs, defense shipping, and departmental banking services, held a meeting on January 17 to assess the situation. It had also directed the Department of Financial Services to maintain enough flow in credits towards exporters that have seen higher shipping costs and many others were holding shipments.
However, there is fear that India’s exports could suffer $ 30 billion in the current fiscal unless the Red Sea crisis persists. Around 80% of the Indian exports to the US and Europe, as well as West Africa, were transported along the Suez Canal route.
