Russia-Ukraine crisis: FM Sitharaman worried over impact on exporters

The finance minister also raised concerns over the impact on the farm sector as it also forms a considerable share of exports to Russia and Ukraine


Indian Economy | Russia Ukraine Conflict

Shine Jacob  | 

Finance Minister Nirmala Sitharaman on Monday expressed concern over the future of exporters owing to the Ukraine crisis as this is set to jack up international freight rates and crude prices further.

She also asked the Indian industry — engaged in the war-torn region — to come up with suggestions to tide over the crisis.

“I am more worried about what’s going to happen to our exporters, who are doing very well,” she said while addressing the industry in a post-Budget interaction in Chennai on Monday. She also expressed worry about essentials like sunflower and fertilisers for which the country is dependent on the region.

There is likely to be a huge spike in the commodities and fertiliser market. Russia was the largest exporter of urea, NPKs, ammonia, UAN and ammonium nitrate last year. Russia accounts for around 34 per cent of global wheat exports.

In oilseeds, Russia and Ukraine contribute 80 per cent of the global sunflower exports and 19 per cent of world’s corn supplies. For India, the edible oil industry is worried and is expected to see a spike in prices as Ukraine and Russia account for 90 per cent of India’s sunflower oil.

ALSO READ: Threat to global peace a challenge for economic revival: FM Sitharaman

“As regards to what is going on, it will have a bearing on our immediate imports, and equally, exports to Ukraine. We are rightly worried about what comes from there,” she added, responding to a question by Mallika Srinivasan, chairman and managing director of Tractors and Farm Equipment.

The finance minister also raised concerns over the impact on the farm sector as it also forms a considerable share of exports to Russia and Ukraine. India’s bilateral trade with Russia was $11.9 billion in 2021 — $3.3 billion exports and $8.6 billion imports. Indian imports include crude oil, petroleum products, fertilisers, gold and coal.

On the other hand, India’s trade with Ukraine last year stood at $3.1 billion — exports at $510 million and imports at $2.6 billion. The FM also said that the ministry is looking into the exports for which payments have already been made.

“For all these issues, I would have a comprehensive look. I will have to get a complete assessment done through the concerned ministries,” Sitharaman added.

On the other hand, the shipping sector is also expecting freight and charter rates to go up.

According to industry estimates, charter rates may even go up by 40 per cent for a 4,200 TEU (20-foot equivalent unit) from $70,000 a day now to even $100,000. She assured the industry that the government is taking stock of all the aspects of the crisis.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor