Effect of Ukraine Crisis in India

Chinayush Waman Wasnik 20114027 B. Tech CSE 3rd Year

Ukraine War
An incident that is having a significant effect on the global economy and
financial system is the war between Russia and Ukraine. Even while India
maintains a neutral posture on international politics and only depends on
Russia and Ukraine for a small portion of its imports (2.1%) and exports
(1%), their war is slowing India's GDP development. The war between
Ukraine and Russia is impacting some major fields of concern in different
nations.
One of the key locations for near-shore and offshore third-party services
in engineering and information technology is Ukraine. Therefore, this
invasion of Ukraine had a significant effect on businesses all around the
world.
Rising inflation, increasing interest rates and a surge in crude oil prices
are just some of the things that this war has brought to the world.

Impact on Indian IT Sector

According to some of the largest Indian IT companies, Europe is the
second-most important customer location, making about 20–25% of the
entire business, of which, Western Europe generates 90% of the money.
However, because to its proximity to customer locations in Europe, Indian
IT businesses are increasingly using the Eastern area as a key delivery
base. Although no decisions have been taken, Indian IT service providers
are considering moving their service/delivery sites from Eastern Europe
to India. This will have an impact on how services are delivered and on
the local Ukrainian economy.
Many Indian engineering corporations started purchasing companies in the
banking, utility, and energy sectors in order to advance their delivery
capabilities. However, due to the ongoing conflicts, many of these
enterprises experience supply problems, which can have a significant
impact on operations and result in deals falling through. Even if already-
signed contracts are unaffected, new ones may be delayed while
European businesses review their financial status and business strategies.
For Indian IT businesses, who are aiming to build the ecosystem of
software start-ups here, this has significant implications.

Impact on Crude Oil and Fuel

If long-running tensions persist, crude oil prices are expected to increase
considerably more due to the sanctions the US has imposed on Russia.
The sanctions may lead to an increase in the price of crude oil. In the
first half of 2021, the prices were increasing to $80 per barrel, a growth
of 45% and as of May 5, 2022, they had already reached the $100 per
barrel milestone, which is the highest in 14 years. But for the time being,
the influence on India will be negligible because the nation imports most
of the oil it uses, much of it from the Middle East where logistics and
shipping are less expensive.
Petrol and fuel prices have already hit their peak. In India, the price of
gasoline and diesel has a big influence on how much goods cost. As the
price of gasoline and diesel rises, the cost of logistics and transportation
will rise as well, raising the price of both domestic and imported goods.
In addition, rising oil prices are projected. India would suffer since it
imports more than 80% of its oil needs. Given that India imports minerals
and fuels worth $205 billion, precious stones worth $832 billion, and
fertilizers worth $609 billion from Russia, a rise in the price of these
items may have a major impact on the country's inflation rate.

Impact on Employment
The situation is worrying from the employment standpoint as well. For
the foreseeable future, European IT service firms are expected to stop or
scale back in hiring, which may leave many skilled Indians without work
or in severe competition for positions in India or the US. The demand will
certainly rise at the same time as many of the international IT projects
that were previously delegated to Ukraine and other East European
nations (which are quickly developing a reputation as a powerhouse of
tech expertise) will likely be moved to India.