New Delhi, Feb 24 (PTI) The Russia-Ukraine military conflict may have an implication on the country’s trade in that region as it would affect the movement of consignments, payments and oil prices, according to exporters.
The Federation of Indian Export Organisations (FIEO) said they have asked exporters to hold their consignments to the region or goods that take the Black Sea route.
To Russia, Ukraine and other eastern European countries, goods move from the Suez Canal and the Black Sea, FIEO Director-General Ajay Sahai said.
He added that the quantity of impact on trade will depend on the duration of the war.
“This is a major setback to trade as it was recovering from the COVID-19 pandemic. Exporters are cautious in dealing with their trade in that region. The war will affect both movement of goods, payments and oil prices,” Sahai said.
Mumbai-based exporter Sharad Kumar Saraf said the current crisis will affect the country’s exports as the West is imposing sanctions on Russia.
The situation in Ukraine deteriorated after Russian President Vladimir Putin announced a military operation in Ukraine, triggering serious concerns over the possibility of a full-scale military confrontation between the two countries.
Following Putin’s announcement, Ukrainian President Volodymyr Zelensky said an “invasion” could be the beginning of a “big war” in Europe.
Bilateral trade between India and Russia stood at USD 9.4 billion so far this fiscal, against USD 8.1 billion in 2020-21.
India’s main imports from Russia include fuels, mineral oils, pearls, precious or semi-precious stones, nuclear reactors, boilers, machinery and mechanical appliances; electrical machinery and equipment and fertilisers. While major export items from India to Russia include pharmaceutical products, electrical machinery and equipment, organic chemicals and vehicles.
India’s bilateral trade with Ukraine stood at USD 2.3 billion so far this fiscal, as against USD 2.5 billion in the last fiscal. Main items of Indian import from Ukraine are agriculture products, metallurgical products, plastics and polymers, etc., while pharmaceuticals, machinery, chemicals and food products, etc., are the major Indian exports to Ukraine.
FIEO Vice-President Khalid Khan said that if the military operations continue for long time, it will have serious implications for exports to and imports from that region. “Oil and gas prices will zoom, there could be payment delays for traders,” he said.
Stock markets were awash in red and the Indian currency slumped against the dollar on Thursday amid Russia’s attack on Ukraine pushing investors to seek refuge in safe-haven assets.
Biswajit Dhar, professor at the Jawaharlal Nehru University, said the conflict will impact oil and gas prices and it could have inflationary implication in the global economy.
“As all the economies are interconnected, the war would have implications on the Indian economy as well,” Dhar said.
Kolkata-based marine exporter Yogesh Gupta said this is a worrisome situation for global trade. Sanctions mean counter sanctions leading to the crisis in availability of goods and services.
“India will be equally impacted, as the movement of goods will become difficult. A war-like situation will put huge pressure on oil prices, and India is vulnerable to its oil import bills,” Gupta said.
Plastics Export Promotion Council of India (PLEXCONCIL) Chairman Arvind Goenka said India’s plastics exports to Ukraine and Russia are in the range of only USD 100-120 million annually but plastics imports are much higher.
Exports comprise both plastic raw materials and value-added plastic products whereas imports are for raw materials mainly, Goenka added.
“If, due to sanctions, India and Russia enter into rupee trade business, it can boost exports of value-added plastics and imports of polymers,” Goenka said.
FIEO President A Sakthivel said that the US sanctions on Russia have added to the uncertainty for exporters.
“We are advising exporters to wait and watch as the exact implication of banking and financial sanctions needs to be evaluated,” he added.
He hoped that the wind-down period will be available in the OFAC sanctions so as to take care of transactions in the pipeline.
Sakthivel, however, requested that the shipments that are at the ports or in the voyage be quickly cleared and the loss to exporters, either during transit or in payment, be sympathetically considered by the government. PTI RR HRS hrs
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