Ukraine war to strain multiple sectors of Indian economy

New Delhi : Russias invasion of Ukraine, and the flurry of punitive sanctions imposed on Moscow by the US and Europe, can impact India Inc due to the resultant spike in commodity prices.
If these prices are not passed on, can increase input costs and squeeze the margins of downstream sectors. Two, trade and banking sanctions can cull India’s export-import activity in the affected region till workarounds are found, Crisil said.
On the other hand, a few sectors such as steel and aluminium may benefit from rising prices. Net-net, the impact of the ongoing war will vary by sectors.
The price of Brent crude has skyrocketed above $125 per barrel from $97 before the Russian invasion began. Without a commensurate increase in retail fuel prices, oil marketing companies are already making losses. The impact of this is also being felt by sectors such as chemicals and paints, which use crude oil-linked derivatives as their primary feedstock. These sectors may see some margin squeeze that could extend well into the first quarter of next fiscal, as inventories bought previously at lower prices run out, Crisil said.
Other commodities will also see further cost inflation. Steel and aluminium (Russia contribute ~6% of global primary aluminium production) prices, which had shot up in recent times from their already-high levels, will have an upward bias.
While this would benefit domestic primary steel makers and aluminium smelters because their realizations will rise, it would cascade negatively for the construction, real estate, and automobile sectors.