India’s sea trade with Europe, the Americas and North Africa is expected to take longer to normalise, given the intensifying conflict in the Middle East. The share of these regions in India’s total trade has been rising over the last decade, according to a Moneycontrol analysis, owing to a diversification of India’s export basket.
The share of Europe, the Americas, and North Africa in India’s overall trade (exports and imports) increased to 37.5 percent in 2023 from 33.4 percent in 2010. Most of this trade is seaborne and passes through the Red Sea and Suez Canal.
In contrast, Eastern and Southeast Asian trade, which passes through the Malacca Strait, held constant at around 30 percent during this period.
Trade in the Red Sea has been disrupted since November 2023, with Houthi rebels attacking trade ships passing through the region. Further conflict will ensure that the disruptions continue for longer.
The Red Sea and Suez Canal account for 12 percent of global trade and the longer route around the Cape of Good Hope adds cost and time.
India's problem is accentuated by its rising exports to Europe, the Americas, and North Africa. Since 2010, exports have risen faster than imports. Meanwhile, India's reliance on East and Southeast Asia as an export market has reduced.
Moneycontrol takes a look at India’s changing trade dynamics:
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