{"id":56586,"date":"2025-10-11T19:01:01","date_gmt":"2025-10-11T13:31:01","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=56586"},"modified":"2025-10-14T11:59:12","modified_gmt":"2025-10-14T06:29:12","slug":"israel-hamas-ceasefire-global-trade-impact","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/11-10-2025\/israel-hamas-ceasefire-global-trade-impact","title":{"rendered":"Israel\u2013Hamas Ceasefire Impact on Global Trade"},"content":{"rendered":"\n<p><strong>Syllabus: GS2\/IR<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Israel and Hamas<\/strong> have agreed to a ceasefire and hostage release deal, potentially ending the two-year-long conflict in Gaza.\n<ul class=\"wp-block-list\">\n<li>The agreement could <strong>reopen the Red Sea shipping route,<\/strong> which had been disrupted by <strong>Houthi attacks on vessels, believed to be backed by Iran.<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Freight Rates and Global Trade<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Since late 2023,<\/strong> freight rates <strong>surged nearly threefold<\/strong> due to the need to reroute vessels around the Cape of Good Hope.<\/li>\n\n\n\n<li><strong>Shorter Suez Canal routes were blocked<\/strong>, increasing transit time, shipping costs, and profits for companies.<\/li>\n\n\n\n<li><strong>India\u2019s trade was particularly affected<\/strong>, as 90\u201395% of it depends on foreign carriers, mainly through the Suez Canal.<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large is-resized\"><img data-dominant-color=\"b1d0e3\" data-has-transparency=\"false\" loading=\"lazy\" decoding=\"async\" width=\"819\" height=\"1024\" src=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/10\/Israel\u2013Hamas-Ceasefire-Impact-on-Global-Trade-819x1024.webp\" alt=\"Israel\u2013Hamas Ceasefire Impact on Global Trade\" class=\"not-transparent wp-image-56589\" style=\"--dominant-color: #b1d0e3; width:417px;height:auto\" srcset=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/10\/Israel\u2013Hamas-Ceasefire-Impact-on-Global-Trade-819x1024.webp 819w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/10\/Israel\u2013Hamas-Ceasefire-Impact-on-Global-Trade-240x300.webp 240w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/10\/Israel\u2013Hamas-Ceasefire-Impact-on-Global-Trade-768x960.webp 768w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/10\/Israel\u2013Hamas-Ceasefire-Impact-on-Global-Trade.webp 1080w\" sizes=\"auto, (max-width: 819px) 100vw, 819px\" \/><\/figure>\n<\/div>\n\n\n<h2 class=\"wp-block-heading\"><strong>Impact on India<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Export Challenges: <\/strong>Longer routes raised costs and transit time, affecting profit margins, especially for low-margin, labour-intensive goods.<\/li>\n\n\n\n<li><strong>Transport Costs: <\/strong>Indian exporters faced higher remittances to foreign shipping lines, exceeding $100 billion annually, even before the Red Sea crisis.<\/li>\n\n\n\n<li><strong>Strategic Projects at Risk: <\/strong>India\u2013Middle East\u2013Europe Economic Corridor (IMEC) could be delayed.\n<ul class=\"wp-block-list\">\n<li>IMEC aims to provide alternative routes to Europe via rail, ship-rail networks, and road, reducing reliance on the Suez Canal and offering up to 40% faster transit.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Policy Response:<\/strong> The crisis highlighted India\u2019s dependence on foreign shipping and the strategic dominance of China in shipbuilding.\n<ul class=\"wp-block-list\">\n<li>Union Cabinet approval (Rs 69,725 crore package) aims to revitalize India\u2019s shipbuilding sector.<\/li>\n\n\n\n<li>Shipbuilding Financial Assistance Scheme (SBFAS) extended to 2036 with Rs 24,736 crore.<\/li>\n\n\n\n<li>National Shipbuilding Mission to oversee initiatives.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background has-fixed-layout\" style=\"background-color:#fff2cc\"><tbody><tr><td><strong>Major Choke Points in International Trade Sea Route<\/strong><br>&#8211; <strong>Strait of Hormuz:<\/strong> Located between the <strong>Persian Gulf and the Gulf of Oman, <\/strong>the Strait of Hormuz is a crucial passage for oil shipments from the Middle East.\u00a0<br>1. A significant portion of the world&#8217;s oil supply passes through this choke point.<br>&#8211; <strong>Malacca Strait:<\/strong> Situated between the <strong>Malay Peninsula and the Indonesian island <\/strong>of Sumatra, the Malacca Strait is one of the busiest waterways globally.\u00a0<br>1. It connects the Indian Ocean to the South China Sea and the Pacific Ocean, making it a key route for trade between Europe, the Middle East, and East Asia.<br>&#8211; <strong>Panama Canal: <\/strong>Linking the <strong>Atlantic and Pacific Oceans,<\/strong> the Panama Canal is crucial for maritime trade between the Americas, Europe, and Asia.\u00a0<br>1. It allows ships to bypass the lengthy and treacherous journey around the southern tip of South America.<br>&#8211; <strong>Taiwan Strait:<\/strong> Separating Taiwan from mainland China, the Taiwan Strait is essential for shipping in the East Asian region. It is a heavily trafficked waterway for goods moving between China, Taiwan, Japan, and other Asian nations.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Expected Outcomes<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The ceasefire <strong>may ease freight rates<\/strong> and improve global trade, particularly India-Europe exports.<\/li>\n\n\n\n<li>The long-term impact depends on Houthi compliance and security along the Red Sea route.<\/li>\n\n\n\n<li><strong>With freight rates now expected to ease India\u2019s exports of low-margin products <\/strong>such as agricultural goods, textiles, footwear, and marine products could find easier transit to Europe.\n<ul class=\"wp-block-list\">\n<li>India relies heavily on the Suez Canal route for its trade with Europe, the US, Africa, and West Asia.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>India is now prioritizing self-reliance in maritime logistics, including shipbuilding, to reduce strategic vulnerability.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/israel-gaza-ceasefire-deal-impact-india-trade-economy-shipping-10298431\/\" target=\"_blank\" rel=\"noopener\"><strong>IE<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong>Context<\/strong><\/p>\n<li class=\"ms-5\">Israel and Hamas have agreed to a ceasefire and hostage release deal, potentially ending the two-year-long conflict in Gaza.<\/li>\n<p><\/p>\n<p><strong>Freight Rates and Global Trade<\/strong><\/p>\n<li class=\"ms-5\">Since late 2023, freight rates surged nearly threefold due to the need to reroute vessels around the Cape of Good Hope.<\/li>\n<li class=\"ms-5\">Shorter Suez Canal routes were blocked, increasing transit time, shipping costs, and profits for companies.<\/li>\n<li class=\"ms-5\">India\u2019s trade was particularly affected, as 90\u201395% of it depends on foreign carriers, mainly through the Suez Canal.<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/11-10-2025\/israel-hamas-ceasefire-global-trade-impact\" class=\"btn btn-primary btn-sm float-end\">Read\u00a0More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-56586","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/56586","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=56586"}],"version-history":[{"count":3,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/56586\/revisions"}],"predecessor-version":[{"id":56607,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/56586\/revisions\/56607"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=56586"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=56586"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=56586"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}