In the vast tapestry of global commerce, disruptions often emerge from unexpected quarters, sending shockwaves through delicate supply chains. The Red Sea crisis, triggered by missile and drone attacks by Yemen’s Houthi militants, has become a formidable hurdle for India’s small exporters, transforming what was already a challenging landscape into a perilous journey. At the heart of the matter lies the re-routing of ships away from the Suez Canal, a vital artery for India’s merchandise trade with Europe and the United States. The ripple effects of this strategic shift are keenly felt by small exporters who find themselves grappling with soaring shipping costs and extended delivery times.

The aftershocks have created a daunting scenario where even the survival of these businesses is at stake. The tales of woe from exporters in Kolkata, Chennai, and other hubs paint a stark picture of businesses stretched to their limits. Indian exporters lament losing significant orders to competitors in Europe who benefit from stable freight rates. This scenario is emblematic of a broader trend where countries like Turkey and Poland gain an advantage, siphoning off business from their Indian counterparts. For small exporters operating on razor-thin profit margins, the consequences are dire. The fact that they were already navigating challenging terrain, with profit margins typically between 3 and 7 per cent, intensifies the impact of the Red Sea crisis. As they watch orders slip away and absorb increased costs, the very fabric of their existence is fraying. The situation is exacerbated by longer shipping times leading to reduced freight capacity, exacerbating container scarcity. In the textile hub of Tirupur, small exporters are operating at a mere third of their capacity, and job losses are becoming visible. A dire plea emerges from entrepreneurs’ associations, urging government intervention to prevent the impending demise of these small exporters. India’s textile industry, a significant employer of 45 million people directly and 15 million indirectly, is under threat. Textiles, engineering goods, and gems and jewellery ~ India’s key sectors exporting to Europe and the United States ~ are bearing the brunt.

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The scale of the challenge is highlighted by the fact that more than 80 per cent of India’s merchandise trade with Europe and the United States typically passes through the Red Sea. As India’s small exporters grapple with this crisis, there is a glimmer of hope on the horizon. Many export contracts are up for renewal in March or April, marking the start of the business year. Exporters express optimism that customers, with whom they share long-term relationships, will be willing to absorb some of the burden of increased freight costs during contract reviews. Survival of small exporters hinges not only on immediate government relief but also on the ability to forge partnerships that withstand the tempest. The fate of these small exporters serves as a poignant reminder of the fragile interconnectedness that defines our global economy.