From fuel to edible oil and even the pharma sector, how Russia-Ukraine war will affect India

After two long years of reeling under the impact of the COVID pandemic, the global economy was finally on the road to recovery.

Then Russia decided to invade Ukraine, which resulted in the deaths of civilians and soldiers, people fleeing to neighbouring countries and   severe Western sanctions on Moscow.

Over the last two weeks, more and more countries have cut diplomatic and business ties with Russia. Even though India has maintained a delicate diplomatic balance between Russia and the West,  it cannot avoid the economic fallout.

Let’s examine how the Russia-Ukraine conflict can impact Indian industries, including fuel, pharma and edible oil:

Impact on fuel prices

World Bank Chief David Malpass has termed Russia’s invasion of Ukraine an “economic catastrophe” that will surely cut global economic growth. The economic impact of the war will result in the rise in prices of oil and gas, he added.

After the US banned all oil and gas imports from Russia on Tuesday, Brent crude was trading at $130.8 per barrel on Wednesday morning.

Indian customers have been enjoying stable fuel prices since early November when oil marketing companies decided to keep the price of petrol and oil constant.

However, with the elections in Uttar Pradesh, Uttarakhand, Manipur, Goa and Punjab coming to an end and an increase in global prices of crude oil, the companies might look to increase rates to recoup losses and bring prices in line with international benchmarks.

As a result, Indian consumers may start suffering increasing fuel prices starting from this week.

According to The Print, with the Indian crude oil basket’s price about 45 per cent higher than what it was in November, experts believe that if fuel retailers take crude oil price at $115 per barrel, petrol and diesel prices would have to be hiked by at least Rs 15-20 per litre for them to not incur a loss on selling fuel.

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Impact on edible oil

According to a Reuters report, Indians have started panic buying edible oil, fearing that Russia’s invasion of Ukraine may cause a shortage in supply.

India imports more than 90 per cent of its sunflower oil from Russia and Ukraine, though sunflower oil accounts for about 14 per cent of its total edible oil imports.

According to The Times of India, India imports nearly 2.5 million tonnes of sunflower oil, 70 per cent of which comes from Ukraine while 20 per cent is supplied by Russia.

The ongoing armed conflict in Ukraine has hit the supply chains, leading to a short supply of sunflower oil and Palm oil in Malaysia has also hit all-time-high, thus, increased prices of edible oils.

The situation, however, may benefit mustard farmers in Rajasthan and Uttar Pradesh, who will be selling their crop in the coming weeks.

Impact on pharma

According to a Reuters report, the Indian Drug Manufacturers’ Association {IDMA} has said that the prices of raw materials derived from benzene or other petroleum products would rise due to the conflict, leading pharma exporters to look for buyers elsewhere.

However, executives at Indian pharma companies Torrent Pharmaceuticals and Zydus Lifesciences said they saw little or no impact on sales due to the Ukraine conflict.

As per the report, pharmaceuticals accounted for 30 per cent of India’s total exports to Ukraine between April and December last year, amounting to $173.3 million. Russia on the other side purchased pharma products worth $386 million in the same period.
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With inputs from agencies_

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