As Russia’s invasion of Ukraine continues, India may find itself sucked into the maelstrom of an international legal community backlash against Russian businesses and transactions. And for India, there is much to lose. George W Russell explores the ramifications.
While India’s involvement in the crisis that is the Russian invasion of Ukraine has been limited so far, the rising rate of sanctions could be a cause for concern, given Russia’s importance as a military and economic partner.
Russian defence contractors have been strategically important military partners for India, and their ability to continue supplying the country could soon be curtailed. “There are concerns that this could constrain the ability of these suppliers to fulfil existing contracts to India, such as the S-400 and stealth frigates among others,” notes Ambarish Sathianathan, a partner at ELP in Mumbai.
India is the world’s third-largest importer of oil and has consistently looked to source crude from Russia, and there is also a two-fold impact on the steel sector, as India has been looking to diversify its coking coal imports.
Russia and Ukraine are estimated to account for 10% of the world’s steel trade. “With potential supply disruptions on account of the war and sanctions, there could be a greater demand for Indian steel,” says Sathianathan.
Russia and Ukraine are both key sources in the automotive industry’s supply chain, particularly for semiconductor manufacturing, as they provide critical gases and rare earth metals. Russia is also one of the largest exporters of palladium, another key input for auto parts manufacturers.
The Indian government is expected to undertake mitigating measures to protect trade with Russia. Meanwhile, Indian banks continue to await directions from the government on how to deal with Russian banks and related transfers.
One bank has jumped the gun. South Asia’s biggest lender, the State Bank of India, has announced that it would not process any transactions involving Russian entities, subject to international sanctions.
Even as Indian companies wait to assess the impact, global law firms are moving in unison to exit Russia. The exodus from Moscow began as a trickle on 3 March when Allen & Overy declared it would review its Russia portfolio. “As a result, we will refuse new instructions and stop all Russia-linked work that goes against our values,” the firm wrote in a LinkedIn post. “We support and encourage the international community in bringing pressure to bear to end this brutal conflict.”
The firm followed in the footsteps of Linklaters, which said it would “wind down” its operations in Russia and close the Moscow office. “We will not act for individuals or entities that are controlled by, or under the influence of, the Russian state, or connected with the current Russian regime, wherever they are in the world,” the firm said in a statement.
Mannheimer Swartling has ceased its work with Russian clients and relocated all its Swedish lawyers based in Moscow ahead of plans to exit the market altogether. According to the Swedish firm, Russian operations are “suspended”, and it has stopped accepting any work on behalf of Russian clients in any of its offices.
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