Fact Check: Pankaj Chadha, Chairman of the Engineering Exports Promotion Council of India, stated that the escalation of the conflict in the Middle East could increase shipping costs for Indian exports by 40-50%.

Fact Check: "Pankaj Chadha, Chairman of the Engineering Exports Promotion Council of India, stated that the escalation of the conflict in the Middle East could increase shipping costs for Indian exports by 40-50%."

What We Know

Pankaj Chadha, the Chairman of the Engineering Exports Promotion Council of India, made a statement regarding the potential impact of the escalating conflict in the Middle East on Indian exports. According to reports, Chadha indicated that the ongoing tensions, particularly between Israel and Iran, could lead to a significant increase in shipping costs for Indian exports, estimating a rise of 40-50%. This assertion was supported by analysts who noted that disruptions in oil supply and shipping routes, particularly through the Suez Canal and the Red Sea, could severely affect export logistics and costs (The Hindu).

Chadha elaborated that rerouting ships around the Cape of Good Hope, due to conflict-related disruptions, would add considerable time and expense to shipping operations. Specifically, he mentioned that this detour could extend shipping times by 15-20 days and increase costs by $500-1,000 per container, which translates to the aforementioned percentage increase in overall shipping costs (The Hindu).

Analysis

The claim made by Pankaj Chadha appears to be well-founded based on the current geopolitical context and economic analysis. The situation in the Middle East, particularly the conflict between Israel and Iran, has historically led to fluctuations in oil prices and shipping routes. The Strait of Hormuz, a critical chokepoint for global oil shipments, is particularly vulnerable during such conflicts, which can cause ripple effects on global shipping costs (The Hindu).

Chadha's estimates of a 40-50% increase in shipping costs align with the broader economic understanding of how geopolitical tensions can affect trade logistics. The reliance of India on imported oil—over 80% of its crude oil needs—means that any disruption in oil supply can have a cascading effect on export costs due to increased fuel prices and shipping delays (The Hindu).

While some analysts, like Norbert Rücker from Julius Baer, suggest that oil prices may stabilize after an initial spike, the immediate effects of such conflicts on shipping logistics are undeniable (The Hindu). The credibility of the sources reporting on Chadha's statements is also strong, as they are established news outlets with a history of covering economic and geopolitical issues.

Conclusion

Verdict: True
The statement by Pankaj Chadha regarding the potential 40-50% increase in shipping costs for Indian exports due to the escalation of conflict in the Middle East is substantiated by credible sources and aligns with economic principles regarding the impact of geopolitical tensions on trade. The analysis of shipping routes and oil supply dynamics supports the validity of Chadha's claims.

Sources

1. Israel-Iran conflict to impact oil supply to India, increase export costs by 40-50%
2. Trump's proposed 50% tariff hike may hit $5 bn engineering exports
3. India's Engineering Exports to US at Risk Due to Latest 50% Trump Tariff
4. Indian engineering exports to US to fall by $4-5 b due to Trump tariffs
5. Trump's proposed 50% tariff hike may hit $5 billion engineering exports
6. Trump's 50% tariff on Steel & Aluminium could hurt India's engineering goods exports
7. Israel-Iran conflict may impact oil supply to India, spike shipping costs
8. Trump's 50% Tariff: Will Affect Foreign Steel & Aluminum; India's Engineering Exports to be Affected