• Source:JND

The conflict in West Asia, involving Iran, Israel and the United States, has entered its sixth day and has claimed nearly 2,000 lives across the region. The escalating situation in the Gulf is closely monitored as the region has some of the world's most crucial maritime chokepoints like the Strait of Hormuz, Bab al-Mandab Strait and the Suez Canal. Iran has already shut the Strait of Hormuz, the passage through which around 60-70 per cent of India's oil shipments pass.

While countries like Russia, China, India, Malaysia, Japan, South Korea, and Pakistan may not be directly impacted in terms of destruction, their trade will surely be hit. A massive portion of global energy and commercial trade passes through these shipping routes, which means it has a direct impact on the export and import of several countries.

Amid the conflict, there are reports that Indian exporters are increasingly facing uncertainty over payments from importers in the Gulf region. Their tensions are further heightened due to demurrage charges, which are applied when containers remain in the port beyond the allowed "free time" for loading or unloading vessels.

Iran-US War: Not Just Oil, Rice Exports Also Affected

The escalating tensions in the region have not only threatened the oil supplies, but the disruption has also affected another important global agricultural commodity, i.e. rice. Rice shipments from India have been largely affected as the Gulf is one of the largest importers of Basmati rice, which is consumed by countries like Saudi Arabia, Iraq, the UAE and Iran. The shipments are usually high during Ramadan every year. However, that is not the case this year.

According to The Indian Express report, around 3,000 rice containers are stuck at the Kandla and Mundra ports, and exporters are estimating about 2-4 lakh tonnes of rice being stuck at various nodes of the supply chain.

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Dev Garg, Vice President of the Indian Rice Exporters Federation (IREF), as quoted by IE, said, "Over 3000 rice containers are stuck at Indian ports. The shipments are stuck in three nodes: at Indian ports, in transit and at the destination port. Exporters have limited options available, and we have sought several support measures from the government, including the waiver of port charges."

How will it impact India?

This is a cause of concern for India as it affects India's agricultural economy and trade relations. The reduction in export demand would lead to a surplus in the domestic market. Farmgate prices can drop, ultimately lowering incomes for farmers in Punjab and Haryana, who produce most of the Basmati rice. Exporters will also face a crisis as many exports are made on credit.

Union Commerce Minister on West Asia conflict

Amid growing concerns, Union Trade and Commerce Minister Piyush Goyal on Tuesday stated that the Inter-Ministerial group is closely monitoring the developments in West Asia. He wrote on X, "Government under PM @NarendraModi ji's leadership remains firmly committed to enabling a stable and responsive trade environment for our traders and exporters, safeguarding their interests and ensuring seamless operations."

 

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