Impact of Russia-Ukraine War on Indian Economy

The worst hit by the war is definitely the economy sector.

Insight Bureau: Lives are deteriorating with hundreds dying everyday in the ongoing conflict between Russia and Ukraine. The worst hit by the war is definitely the economy sector.

While India almost completed its evacuation mission to bring back all its citizens stuck in Ukraine, experts believe the Indian economy will face turbulence due to the war.

Even though the war is being fought 5000 km away, the common man here is quite in tense as the price of many items like fuel, cooking gas, sunflower oil, automobiles, petroleum products, gold, precious stones and metals, coal & fertilizers are set to become highly expensive in coming days. We have already witnessed cooking oil prices going up.

The Chief Rating Officer of Investment Information and Credit Rating Agency (ICRA) emphasized that the economic sanctions imposed on Russia will impact Indian companies. “Defence, tea exports, steel, coal, pharmaceuticals, fertilizer, oil, and gas sectors are likely to face maximum heat,” he said.

A rise in gas prices is expected to give stress the fertilizer sector. Rising of ammonia and urea prices are likely to hurt India’s subsidy budget and it could put serious burdens on the farmers of the country.

As Russia is also a major exporter of aluminium, the sanctions may impact local auto and auto ancillaries.

The price of aluminium hit a record high of $3,552 per tonne on the London Metal Exchange, following Russia Ukraine conflict.

Not just the automobile sector, but the Indian edible oil industry is also worried that the ongoing crisis will for sure delay imports and a hike in the price of sunflower oil.  Ukraine and Russia together responsible for 90 per cent of India’s sunflower oil imports. Prices will be hiking badly if the situation worsens.

India is massively dependent on crude cooking oil. If supply is halted, it will create havoc on Indian households.

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India bought 1.89 million tonnes of crude cooking oil till October last year from which Ukraine supplied 74% while Argentina and Russia each accounted for about 12 per cent of the imports.

Owing to various sanctions and uncertainties, many cooking oil companies have shut operating in Ukraine, which is worrying, indeed.

Crude oil prices have already reached $120 per barrel which is the reason to lead to a surge in fuel prices in India too.

India, though is not a major trade partner with Russia and Ukraine, but some sectors and commodities could feel the heat of the ongoing war.

India exported goods such as pharmaceutical products, electronics, iron and steel, tea, and auto components worth $3.3 billion to Russia, where the bilateral trade between India and Russia amounted $11.9 billion last year while the bilateral trade between India and Ukraine stood at $3.1 billion in 2021, while exports from India stood at $510 million.

Imports reported $8.6 billion last year, India imported crude oil, petroleum products, gold, precious stones, coal, fertilizers, and precious metals.

Indian pharmaceutical exports will also not be spared from the ongoing crisis as India is the third-largest exporter of pharmaceuticals to Ukraine, after Germany and France. With the war intensifying, companies are worried about the payments getting failed and new orders taking a back seat.

However, Russia accounts for 2.4% while Ukraine accounts for 0.74% of the total pharmaceutical exports from the country.

Ukraine also exports 30% wheat to India, which was stopped after the war broke out. But as Indian farmers are producing heavy quantity of wheats, India is not facing a threat till now, but can happen, Finance Minister Nirmala Sitharaman stated.

Economists are now worrying about inflation because prices are skyrocketing in global commodity markets.


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