weather_iconAshburn | 11.07 °C | AQI 20
Tuesday, 5 November, 2024

---Advertisement---

India

India-Middle East Economic Corridor Faces Uncertainty Amid Israel-Iran Tensions

As Israel-Iran tensions escalate, Middle-East crisis deepens. New Delhi is facing the question if the India-Middle East Economic Corridor (IMEEC) will be delayed, hitting the Indian Economy.

Red Sea Attacks
Red Sea Attacks

Will the India-Middle-East Economic Corridor (IMEEC) be hit hard and derailed before it materialisesdue to the Israel-Iran tension and the consequent Middle-East crisis? How much will the Indian foreign trade suffer due to escalating tension in the Middle East and what strategy has India adopted to compensate for the damage?

What Is India-Middle East-Europe Economic Corridor

To improve international trade and have direct, uninterrupted and dedicated access to the European Union and the USA, the India-Middle East-Europe Economic Corridor (IMEC) was planned in 2023. It took a concrete shape after an MoU was signed by the governments of India, United States, United Arab Emirates, Saudi Arabia, France, Germany, Italy, Jordan and the European Union on September 9, 2023, on the sidelines of the G-20 meeting.

---Advertisement---

Also Read: Escalating Israel-Iran Tensions: Can Khamenei’s Regime Withstand Rising Dissent, International Pressure?

It will have two parts- while the Eastern corridor will connect India to Gulf countries, the Northern Corridor will connect the Gulf to the European Union.

---Advertisement---

Will IMEEC Suffer?

Experts believe this project may be jeopardised now with the main stakeholders sitting with their fingers crossed and adopting the wait-and-watch policy as the Israel-Iran war is looming large over the Middle East area.

With Saudi Arabia and the United Arab Emirates being the main stakeholders of the Eastern Corridor and their perceived enemies fighting at their doorsteps, it is most unlikely that they may pay attention or make an investment to this project at this juncture. The second part of the project- Northern Corridor can be considered only after the first part is completed.

Indian Exports Fall

However, the main concern for India is the deteriorating international trade and the danger of it worsening. According to the Global Trade Research Initiative, while the overall Indian exports fell by 9%, the export of petroleum products slipped by 38% from $ 9.54 billion in August last year to $5.95 billion.

Exports To Europe To Suffer

Indian exports to Europe came down by 21% in 2023 as the demand for low-end engineering products, textiles and garments fell because of increased shipping costs. The silver lining is the fact that while the exports to the Gulf Cooperation Council increased by 17.8%, those of Iran went up by 15.2% in 2023 despite the Israel-Hamas War in the Gaza Strip.

Red Sea Crisis

The International Monetary Fund has said in its report that international trade through the route of the Suez Canal has come down by 50% due to increased shipping costs and the dangers of being attacked by the Houthi militants in the Red Sea.

Also Read: Explained: How Hezbollah Chief Hassan Nasrallah’s Killing May Impact India’s Economic, Political Landscape

If media reports are to be believed, Houthi rebels in Yemen have targeted more than 80 merchant ships in the Red Sea with missiles and drones since the Israel-Hamas War in the Gaza Strip started in October. Besides, they seized one vessel and sank two. They have fired missiles and sent drones indiscriminately irrespective of the origin or the ownership of the vessels.

Shipping Through Cape of Good Hope

On the other hand, shipping through the Cape of Good Hope has gone up by 74% even though the ships have to cover a much longer distance taking more time, besides increased cost. In the first two months of this year, a rise of 15% in exports through this route has been registered.

Will the Middle East Crisis Escalate?

As the Israel-Iran tensions have escalated to a new height, Tel Aviv is engaged in bombings four places at a time- Gaza Strip, Lebanon, Yemen and Syria, Israel and Iran are staring at an all-out war the situation is most likely to worsen. It may disrupt the supply chain, the crude prices may shoot and different economies may be hit in several different ways.

It may get further complicated if the Iran-Israel War breaks out and other nations join it. India has remained neutral in the crisis and emphasised the need to maintain restraint, stop the war immediately and respect human rights.

It has called for a ceasefire in the Gaza Strip. India has also maintained a wait-and-watch policy in the Israel-Hezbollah showdown. However, if the crisis further escalates, the situation may be more grave for Indian exports.

HISTORY

Written By

Pramode Mallik


Get Breaking News First and Latest Updates from India and around the world on News24. Follow News24 on Facebook, Twitter.

Related Story

Live News

---Advertisement---


live

US Election Results 2024 Live Updates: ‘Get Out And Vote’, Donald Trump Tells Supporters

Nov 05, 2024
US Election Results 2024
  • 10:56 (IST) 5 Nov 2024

    US Election Live: Elon Musk Shares A Post, 'ChatGPT Is In Favor Of Kamala Harris'

  • 10:51 (IST) 5 Nov 2024

    US Election Live: Kamala Harris And Donald Trump Closes Campaign

  • 10:44 (IST) 5 Nov 2024

    US Election Live: Kamala Harris Mocked On Social Media For Awkward Chant In Pennsylvania

N24 Shorts Logo

SHORTS

Muhurat Trading
Business

Muhurat Trading: How Sensex And Nifty Performed In Last 5 Diwali Special Sessions?

India’s stock exchanges, BSE and NSE, host an annual Muhurat Trading session on the day of Diwali. The term ‘muhurat’ denotes an auspicious moment, and this unique session, spanning about an hour in the evening, marks the commencement of the traditional Hindu accounting year, Samvat.

View All Shorts

---Advertisement---

Trending