External Affairs Minister S. Jaishankar has highlighted the urgent need for de-risking trade flows amid ongoing conflicts in West Asia, which have disrupted crucial shipping routes and heightened shipping costs. Speaking at the India-Mediterranean Business Conclave on September 6, Jaishankar underscored the importance of strategic planning to ensure global connectivity and economic resilience.
Impact of West Asia Conflict on Trade
Key Points from Jaishankar’s Address:
- Disruptions in Shipping Routes: The conflict in West Asia has caused significant disruptions in crucial shipping lanes, impacting global trade flows.
- Increased Shipping Costs: The rerouting of trade and heightened security concerns have led to increased shipping costs.
- Need for De-Risking: Jaishankar emphasised that these disruptions underscore the necessity for de-risking strategies to mitigate future risks.
Examples of Disruptions:
- Houthi Attacks: Recent attacks on merchant ships in the Red Sea by Houthi militants, reportedly in response to Israel’s military actions in Gaza, have exacerbated shipping challenges.
India-Middle East-Europe Economic Corridor (IMEC)
Overview of IMEC:
- Announced at G20 Summit: The IMEC was introduced on the sidelines of the G20 summit in Delhi last year.
- Objective: To serve as a cornerstone of global connectivity, boosting trade and other critical flows between India, Europe, and the Middle East.
Benefits of IMEC:
- Enhanced Trade: The corridor aims to improve trade efficiency across these vital regions.
- Innovative Logistics: IMEC incorporates innovative logistics and sustainable practices to strengthen economic ties.
- Increased Resilience: By integrating advanced frameworks, IMEC seeks to contribute significantly to growth and economic resilience.
Strategic Importance of Security and Stability
Security Concerns:
- Volatile World: In the current volatile and uncertain global landscape, security and stability are crucial.
- Defence Cooperation: Strengthening defence and security cooperation with Mediterranean nations is essential, paralleling deeper economic links.
Actions and Initiatives:
- Defence Exercises: Ongoing exercises, consultations, and exchanges are vital for maintaining robust security frameworks.
- Emerging Technologies: With rapidly advancing technologies and supply chain disruptions, increased industry interaction is necessary.
Make in India and Defence
Make in India Initiative:
- Defence Sector Growth: The Make in India initiative has gained substantial traction in the defence sector.
- Local Production: Encouraging local production and industry involvement in defence is key to enhancing national security and economic self-reliance.
Future Prospects:
- Industry Interaction: There is a strong case for more extensive industry interactions to support the evolving needs of the defence sector.
Conclusion
The ongoing conflicts in West Asia have highlighted critical vulnerabilities in global trade routes, making the case for de-risking more urgent than ever. The IMEC presents a promising solution, enhancing connectivity and resilience across key regions. As India, Europe, and the Middle East deepen their economic and security collaborations, the emphasis on robust defence and innovative logistics will be crucial.
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