India’s import bills might cross $ 600 billion mark this fiscal, pushing up inflation, CAD: India Ratings

The ongoing crisis in Ukraine is set to push the country’s import bills beyond the $ 600 billion mark this fiscal, given India’s import dependence on crude oil, natural gas, gems and jewellery, edible oils and fertilisers, which can lead to a spike in inflation and current account deficit, and a falling rupee, warns an India Ratings report. Ratings agency India Ratings said India’s merchandise imports may cross $ 600 billion in FY22, up from $ 492.9 billion in the first 10 months.

Merchandise trade with Ukraine, which had peaked at $ 3.11 billion in FY13, has declined to $ 2.35 billion so far in FY22 from $ 2.59 billion in FY21. India’s merchandise trade with Russia was a bit higher at $ 8-11 billion during FY18-FY21 and stood at $ 9.44 billion so far this fiscal.

The report fears that the conflict can trigger capital flight from emerging markets, which can result in weakening of the rupee but it expects the higher forex reserves ($ 632.95 billion as of February 18) to provide a cushion to a large extent.

Export cargoes to CIS (Commonwealth of Independent States) countries are being impacted due to ongoing war between Russia and Ukraine as no shipping line is willing to take consignments there, exporters’ body FIEO said.

CIS countries include Azerbaijan, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine.

India’s main imports from Russia include fuels, mineral oils, pearls, precious or semi-precious stones, nuclear reactors, boilers, machinery and mechanical appliances; electrical machinery and equipment and fertilisers. While major export items from India to Russia include pharmaceutical products, electrical machinery and equipment, organic chemicals and vehicles. The main items of Indian import from Ukraine are agriculture products, metallurgical products, plastics and polymers, etc., while pharmaceuticals, machinery, chemicals and food products, etc., are the major Indian exports to Ukraine.

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