GTRI: India must treat maritime insecurity as recurring risk to global trade, not a temporary problem

The Global Trade Research Institute (GTRI) has said that India must treat maritime insecurity as a recurring risk to international trade and not as a temporary problem. Stating that the Red Sea crisis completing 1,000 days without a durable solution showed that military action can intercept missiles but cannot restore commercial confidence, GTRI’s Founder Ajay Srivastava said that “for India, the crisis has made trade with Europe, the UK, North Africa and the US East Coast slower and more expensive, hurting MSME exporters through higher freight, insurance and working-capital costs.” Highlighting a growth in shipping chokepoints, he recommended that India must “strengthen domestic shipping capacity, trade finance, naval protection and alternative transport corridors.”Houthi attacks since November 2023 have forced shipping lines to reroute vessels from the Suez Canal around the Cape of Good Hope, adding 10-14 days to voyages and sharply raising freight, fuel, insurance, inventory and working-capital costs. The GTRI said that around 80% of India-Europe merchandise trade normally uses this corridor, “exposing exports to Europe, the UK, North Africa and the US East Coast. MSME exporters of textiles, engineering goods, chemicals, leather, carpets, food and marine products have been hit particularly hard.The crisis began on November 19, 2023, when Yemen’s Houthi movement hijacked the Galaxy Leader. The Japanese-chartered vehicle carrier was linked to an Israeli businessman. The Houthis seized the ship and its 25 crew members. The Houthis claimed they were supporting Palestinians in Gaza and would attack ships linked to Israel. They later widened their campaign to vessels connected with the United States and United Kingdom. Some ships with no clear Israeli connection were also targeted. More than 100 merchant vessels have since been attacked or threatened. The Rubymar sank in March 2024 and the Tutor in June 2024. The Magic Seas and Eternity C were sunk in July 2025. Attacks on the True Confidence, Sounion and other vessels killed seafarers and created serious environmental risks.Western naval forces intercepted many Houthi missiles and drones. The US, UK and Israel also attacked Houthi targets in Yemen. However, these operations failed to end the Houthis’ ability to attack ships. Maersk and Hapag-Lloyd began returning selected services to the Suez route in July and August 2026. But the August 11 attack on the Egyptian-owned Tihamah, which reportedly killed four crew members and two rescuers, indicated that the route remains dangerous.Major container companies continue to send much of their Asia-Europe and Asia-US East Coast trafic around Africa’s Cape of Good Hope. Suez Canal trafic remains 60-70% below its pre-crisis level. GTRI noted that the diversion around Africa absorbs an estimated 5-7% of global container capacity and adds 10-14 days to many voyages, with freight rates remaining about 25-40% above normal levels, while ships also face war-risk insurance charges.Markets served through this corridor account for about half of India’s exports and 30% of imports. The most exposed markets are the UK, Germany, the Netherlands, Belgium, France, Italy, Spain, Greece, Egypt, Israel, Jordan, North Africa and the US East Coast. The US West Coast is less affected because most cargo travels across the Pacific. Trade with the UAE, Oman and Qatar does not require the Suez Canal, but it still faces higher insurance costs and wider regional security risks. At the worst points of the crisis, freight rates on some India-Europe and India-US routes increased by 200-400%. Longer voyages raised fuel, freight, insurance and inventory costs. They also delayed payments and blocked exporters’ working capital for additional weeks. Vulnerable products include textiles, garments, engineering goods, chemicals, leather, carpets, rice, spices, grapes and marine products, as they often have low profit margins and cannot easily absorb higher freight costs.Imports of European machinery, chemicals, auto components, metals and medical equipment also became more expensive and took longer to arrive. India deployed naval ships and surveillance aircraft in the Gulf of Aden, Arabian Sea and western Indian Ocean. Indian warships rescued crews, assisted damaged vessels and countered piracy.

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