Michael Barbella, Managing Editor06.28.22
Russia's armed conflict with Ukraine may be a drain on the world's economy and supply chain, but it's likely to become a lucrative opportunity for India.
With the worsening supply chain issues and removal of its banks from the SWIFT International payment system, Russia is looking to collaborate with Indian SMEs to minimize its potential risk of medical device shortage. This is expected to strengthen India’s presence within Russia’s medical device market, according to GlobalData.
Russia’s medical devices market increased at a 4% compound annual growth rate (CAGR) between 2015 and 2020. The growth slipped slightly in 2021 and is expected to fall further this year because of the four-month-old conflict, which has killed 4,677 Ukrainians (as of June 23, as per the Office of the United Nations High Commissioner for Human Rights).
Russia receives about 60% of India’s medical device exports going to Commonwealth of Independent States (CIS). U.S. and European companies have been major suppliers for the Russian medical devices market. Despite medical devices being exempted from sanctions, the current restrictions related to logistics have greatly reduced imports to Russia from these nations. This paved the way for Indian medical device companies to boost their supplies to Russia.
“Major medical device firms, already collaborating with the Western countries, are unlikely to further their collaboration and provide supplies to Russia, and hence, Indian SMEs are seeing this as an opportunity to gain access to one of the most prominent markets within the CIS region,” said Vinita Sippy, a medical devices analyst at GlobalData.
With Indian SMEs, transactions could be carried through banks that do not fall under the Western sanctions’ regime and therefore, the two nations have been in discussions related to alternate payment transactions that will allow for rouble to rupee conversion without having to rely on U.S. dollars. Russia has defaulted on its foreign debt for the first time since the Bolshevik Revolution in 1918.
“In addition to strengthening its ties with Russia and increasing exports, India must also assess the risks and ensure that the existing and new collaborations with U.S. and European nations are not affected,” Sippy said.
With the worsening supply chain issues and removal of its banks from the SWIFT International payment system, Russia is looking to collaborate with Indian SMEs to minimize its potential risk of medical device shortage. This is expected to strengthen India’s presence within Russia’s medical device market, according to GlobalData.
Russia’s medical devices market increased at a 4% compound annual growth rate (CAGR) between 2015 and 2020. The growth slipped slightly in 2021 and is expected to fall further this year because of the four-month-old conflict, which has killed 4,677 Ukrainians (as of June 23, as per the Office of the United Nations High Commissioner for Human Rights).
Russia receives about 60% of India’s medical device exports going to Commonwealth of Independent States (CIS). U.S. and European companies have been major suppliers for the Russian medical devices market. Despite medical devices being exempted from sanctions, the current restrictions related to logistics have greatly reduced imports to Russia from these nations. This paved the way for Indian medical device companies to boost their supplies to Russia.
“Major medical device firms, already collaborating with the Western countries, are unlikely to further their collaboration and provide supplies to Russia, and hence, Indian SMEs are seeing this as an opportunity to gain access to one of the most prominent markets within the CIS region,” said Vinita Sippy, a medical devices analyst at GlobalData.
With Indian SMEs, transactions could be carried through banks that do not fall under the Western sanctions’ regime and therefore, the two nations have been in discussions related to alternate payment transactions that will allow for rouble to rupee conversion without having to rely on U.S. dollars. Russia has defaulted on its foreign debt for the first time since the Bolshevik Revolution in 1918.
“In addition to strengthening its ties with Russia and increasing exports, India must also assess the risks and ensure that the existing and new collaborations with U.S. and European nations are not affected,” Sippy said.