Companies typically use the Red Sea route through the Suez Canal to trade with Europe, North America, North Africa and part of the middle-east--regions that accounted for almost half of India’s exports and 30% of imports in 2022-23. Around 95% of India’s goods trade volumes are shipped through sea. While sectors like textiles, chemicals may not be severely impacted yet, a sustained disruption of trade channels could crank up working capital needs and dent operating profits for them as well as capital goods players, CRISIL warned. “While the immediate impact of the crisis would be low for most of India Inc., a prolonged strife can affect the profitability and working capital cycle of export-oriented industries. Supply chain issues could also intensify, curbing trade volume and renewing inflationary pressures,” it concluded.

Source: The North Africa Journal January 25, 2024 14:43 UTC