New Delhi: The Indian government is actively exploring support measures for domestic shipping companies and exporters as insurance costs have shot up due to the war-risk premium that is being levied due to the Iran war, which has engulfed the Middle East region, according to a senior Finance Ministry official.
Industry stakeholders have flagged the sharp increase in insurance costs during consultations held by Shipping Secretary T.K. Ramachandran and Department of Financial Services Secretary M. Nagaraju with exporters and shipping companies to assess the impact of the West Asia conflict on shipping costs and export logistics.
Exporters and shipping companies raised concerns over the surge in war risk premiums for vessels operating through key maritime corridors linked to West Asia, including routes around the Strait of Hormuz. The increase in insurance costs, along with possible rerouting of vessels to avoid conflict zones, has raised logistics expenses for Indian exporters.
The increased insurance costs are affecting the overall competitiveness of Indian companies operating in international markets, as higher operational expenses directly impact profit margins and pricing strategies.
Nearly half of India’s crude oil imports – along with a large share of its liquefied natural gas (LNG) and liquefied petroleum gas (LPG) shipments – normally pass through the Strait of Hormuz, the narrow Gulf chokepoint now effectively closed by the conflict.
Meanwhile, commercial ships were attacked in the Strait of Hormuz on Wednesday after the United States said it had eliminated as many as 16 Iranian mine-laying vessels in order to prevent Tehran from blocking the crucial waterway through which 20 per cent of the world’s oil exports transit. The drastic measure was taken due to the disruption in oil supplies that was leading to price hikes in the global market.
A bulk carrier was hit by an unknown projectile off Dubai on Wednesday morning, bringing the tally of incidents affecting vessels in the region up to 17, according to the United Kingdom Maritime Trade Operations (UKMTO). The carrier’s crew was reported to be safe and had evacuated the ship.
The US has also stated that its naval ships will extend protection to commercial ships passing through the Strait of Hormuz.
(IANS)
