‘Rice, marine exports bear brunt for now, but Red Sea woes for India Inc. may worsen’

Indian exporters of rice and marine products are most adversely affected by the strife in the Red Sea, while a prolonged crisis on the key shipping route can affect the profitability and working capital cycle of export-oriented industries and trigger supply chain issues that could renew inflationary pressures, CRISIL Ratings has said.Increasing attacks on ships sailing in the Red Sea region since November 2023 have persuaded shippers to consider the alternative, longer route past the Cape of Good Hope, which has not only stretched delivery time by 15-20 days, but also led to a substantial hike in transit costs with higher insurance premia.

On the import front, the impact is expected to be limited for import-dependent sectors like non-urea fertilisers at this point due to a lean consumption period, but a sustained uptick in sourcing costs would need higher subsidy payments from the government, the firm noted.