Russian aggression in Ukraine has put the spotlight on India’s trade with its former close ally, which now accounts for a tiny 0.8% share in India’s exports, and 1.5% of its imports. This means that apart from the wider ramifications of rising oil prices, the events in Eastern Europe may have a limited direct impact on Indian industry.
“As far as trade is concerned, there is not much concern at the moment, as there is not much that we export or import. Petro imports from Russia are minuscule and can be replaced with other markets," said Ajay Sahai, director-general and CEO of the Federation of Indian Export Organisations (FIEO).
In FY21, India’s exports to Russia stood at $2.6 billion, while imports stood at $5.5 billion. Among top export items, India shipped $469 million worth of pharma products and $301 million worth of electrical machinery to Russia. Other items of exports include tea, apparel and textiles. Petroleum products made up for half of the imports from Russia. However, the $3.7 billion of petroproduct imports is negligible against India’s overall $150 billion petroproduct imports.
Apparel Export Promotion Council (AEPC) chairman Narendra Goenka said India’s textile trade with Russia and Ukraine was quite limited, and hence, the impact on the sector could be minimal. Overall, textile exports may actually benefit if the tensions strengthen the dollar.
Pradeep S. Mehta, secretary-general of non-profit CUTS International, said that while India’s trade ties with Russia or Ukraine was limited, it is an important market for Indian tea exporters. He said India buys defence equipment from Russia, and this trade may see an impact. He added that India could benefit in terms of trade as Russia may look for another market to circumvent Western sanctions.
“I don’t think there is much to get worried about. It could all settle in a week or two because Russia’s finances are also not on solid ground. We don’t expect a long-drawn conflict. But crude oil price is a concern," said V.R. Sharma, managing director, Jindal Steel & Power.
An Indian-origin pharmaceutical businessman operating in Ukraine said on condition of anonymity that the tensions were mounting, but business has not been affected yet.
“The number of cargo ships coming in and out of Ukraine is declining. I have three factories here, and we import as well as export medical products. I am yet to see an impact on my operations," he said, adding that he is not planning to leave Ukraine.
