India' reliance on Bab-el-Mandeb Strait could impact economy: GTRI

India needs to work on finding alternate trade routes in the sea as heavy reliance on the Bab-el-Mandeb Strait, a key route crossing Red Sea, could impact the country's trade with the Middle East, Africa, and Europe, economic think tank GTRI said on Tuesday.

Developing alternative routes such as the deep water port in Chabahar, Iran can help the country, it said.

The situation around the Bab-el-Mandeb Strait, a crucial shipping route connecting the Mediterranean Sea to the Indian Ocean, has escalated due to recent attacks by Yemen-based Houthi militants.

The strait, vital for 30 per cent of global container traffic, has seen increased tensions with various incidents in 2023, including attacks and military manoeuvre by regional and global powers, the Global Trade Research Initiative (GTRI) said.

It added that India, heavily reliant on this route for trade and energy (crude oil and LNG) imports, faces increased costs and security risks, prompting efforts to diversify trade routes and enhance regional maritime security cooperation.

On December 15, Houthi militants hit a Liberian-flagged ship Palatium III with an anti-ship ballistic missile and threatened to attack another with a drone at the Bab-el-Mandeb, it said.

The strikes are continuing for many years but have escalated this year sharply with militants now using anti-ship ballistic missiles. To avoid attacks, most large shipping firms since December 15 have stopped using the Bab el-Mandeb straits for trade with Europe via the Red Sea and Suez Canal.

The closure of this route snaps a critical trade link between Europe and India and all of Asia. The ships going to Europe will now move via a much longer route around the Cape of Good Hope, the bottom tip of Africa.

This change increases voyage distances by 40 per cent and raises transportation time and cost, it said.

The Bab-el-Mandeb Strait, also known as the "Gate of Tears" in Arabic, is a crucial trade route that connects the Mediterranean Sea and the Indian Ocean via the Red Sea and the Suez Canal. It separates Africa from the Arabian Peninsula.

"India is heavily reliant on the Bab-el-Mandeb Strait for its Crude oil, LNG imports and trade with the Middle East, Africa, and Europe. Any disruption to shipping through the strait could have a significant impact on India's economy and security," GTRI Co-Founder Ajay Srivastava said, adding that "India may work to reduce its vulnerability from disruptions in this strait and protect its economic and security interests".

He added that the strait is also a vital route for India's trade with the Middle East, Africa, and Europe and if the strait is blocked, it could lead to disruptions in India's supply chains, which could hurt its economy.

"The instability in the region around the strait is a potential threat to Indian ships and cargo. India could need to deploy additional naval assets to the region to protect its interests," Srivastava said.

India may work to diversify its energy import so that it is less reliant on this strait and this includes increasing imports from other countries in the Persian Gulf, Africa, and Central Asia, he said.