Escalating military conflict in the Middle East is beginning to materially impact Indian trade, with key shipping corridors disrupted and logistics costs rising sharply, according to industry bodies and shipping sources.
The Bab el-Mandeb Strait, Red Sea and Strait of Hormuz—critical routes for Indian trade with Europe, North Africa and the US—are facing heightened risk. Shipping lines including Maersk, Hapag-Lloyd and CMA CGM have begun rerouting vessels around the Cape of Good Hope, adding 15–20 days of transit time.
Industry sources report that marine insurance premiums have doubled in some cases, with war-risk rates rising from around 0.25% to over 0.5% of vessel value, potentially adding $200,000 or more per voyage for large ships. In some cases, P&I insurance coverage has been suspended or withdrawn, posing serious risks to exporters and importers.
Approximately 65% of India’s crude oil imports from the Middle East pass through these routes, underlining the potential economic impact if disruptions persist.
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