Navigating India’s Markets Through The Russia-Ukraine Conflict

There is also a silver lining to the dark cloud if India can revive the Rupee-Ruble trade to become a preferred supplier to Russia. Russia will need the support of a large economy like India for filling the gaps in their economy heavily impacted by the sanctions. There will be enough spoils to share with China which will be the first preference for Russia due to size and proximity.

India should make a serious effort to attract Russian capital to GIFT City. Those investors would find their investments to be much safer and more rewarding compared to western markets. India’s travel and tourism sectors could benefit from the sanctions imposed on Russia, as India could emerge not only as a transit hub for Russian travelers but also as a preferred tourist destination. We should aim to create many more Goas for Russian tourists.

India sends many students to Ukraine and Russia for higher studies. This demand should be used to expand our education sector. Billions of dollars are currently put to use as foreign exchange, to pay for education abroad. Instead, we have an opportunity to free the education sector for scale and size.

The western world will seriously consider reducing supply chain concentrations, and the ‘China + 1’ strategy will be pursued with far more vigour. India could be a big beneficiary of this shift accelerating, in sectors where the government has rolled out performance-linked incentive schemes. This can help sustain our export momentum and facilitate deeper integration into global supply chains. There is some work to do on ease of doing business and rule of law to encourage our entrepreneurs to capture this opportunity.

Russia prepared for sanctions through the diversification of its foreign currency reserves in gold. China could well follow a similar strategy, keeping in mind its long-term plans for Taiwan. If gold prices get supported by the Chinese buying, Indians as the largest holders of the yellow metal will witness a wealth effect at a sizable mass level. Such a wealth effect will support consumption and provide capital for investment to accelerate growth.

In summary, we are on a roller coaster ride but don’t leave the roller coaster mid-way. In the end, you will be glad that you took the ride.