Ukraine Crisis 2014: Impact of Ukraine Crisis on India

Screenshot_1The ongoing political crisis in Ukraine will effect India due to following reasons:

Immediate impact on India: The military stand-off situation of India would go worsen because Ukrainian military facility provides engines for military helicopters of Russian origin (that account for a quarter of the world’s medium, medium-heavy and heavy lift helicopters) and India has contracts with many sourcing naval engines, from where India gets its entire fleet of medium military transport aircraft modernized.

Business and economic factors- The conflict between Russia and Ukraine

  • Would weaker rupee against dollars that will be negative for stocks and for the Indian economy.
  • International oil and gas prices would go up that will adversely effect India, as India will have to spend more dollars to buy Brent as it is dependent on imports for its energy needs. This will pressure the rupee and may lead to a rise in the current account deficit.
  • The FDI inflow into India may be affected adversely. 

Strategic reasons- If the military situation in Ukraine go worse than the relations between the US and Russia would be deteriorate, then at that situation India will be under pressure to take a clear position, as China has taken a clear position and supported Russia. 

Note:  Russia is a key friend of India and has helped repeatedly at the crucial time viz. Because of Russia’s pro-active help, India won the 1971 war against Pakistan and liberated Bangladesh, etc.

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