The impact of the Russia-Ukraine conflict on small businesses in India

With COVID-19 eased up, business owners are now about to get back on their feet and begin recouping at least some of the losses caused by the pandemic.However, the Russia-Ukraine conflict appears to have dashed their hopes by causing price inflation and disrupting the supply chain.Due to the sheer caution in foreign airspace, the Indian import and export industry has suffered greatly. Textile, plastics, steel, pharmaceutical, and compressed natural gas (CNG) industries are all threatened.

Russia is a leading supplier of oil, metals, and natural gas, and higher commodity prices will undoubtedly harm the global economy. The Indian rupee is also falling in value against the US dollar, raising the cost of goods in the country.

“The escalating geopolitical situation is a concern for New Delhi because trade disruptions could potentially impact supply chains and fuel inflation, which has already breached the Reserve Bank of India’s (RBI) tolerance threshold of 6 percent in January” said Finance Minister Nirmala Sitharaman

Why Should Indian MSMEs be worried?

Russia and Ukraine are net exporters of steel, totaling nearly 40 million tonnes. This will disrupt supply chains in the coming months, causing steel prices to rise in the short term.S Jaishankar, Minister for External Affairs, asserted in the Lok Sabha on the conflict between Ukraine and Russia has had significant consequences for the global economy, and that the government is taking measures in the national interest to mitigate the impact.If this conflict continues, the market will experience a sustained period of higher steel prices, resulting in consumers paying more for steel products. He goes on to say that the automobile industry, in particular, will be severely impacted.