It tells us what volatile and unpredictable environment we are all living in. While the pandemic is still not fully behind us, the world woke up to the news of Russia invading its neighbour Ukraine on February 24. That followed a series of global sanctions on Russia from different quarters, including the US, the European Union, the United Kingdom, Canada, France, Australia and Taiwan.
While the fear of Russia invading Ukraine was long looming, and more so ever since the former started building up its armour at the borders, the world couldn’t do enough to stop it.
Nobody likes war, but the reality is that we live in a highly volatile geopolitical environment, which makes the lives of businesses even more complicated, with or without global presence or dependency.
The pandemic taught us how critical it is for businesses to not rely on any particular country or market for supply or rather sales, as that will eventually hit them in different ways.
Indian companies can’t remain immune to business risks arising out of international developments in this globalised world. But the question is, can companies eliminate those risks in this complex world where the supply of critical components, for instance, flows through different layers in different countries. The answer to that question is: No, but those risks can be mitigated with the diversification of their dependency.
The semiconductor shortage that India was expecting to ease later this year now stands to get aggravated as a fall out of the Russia-Ukraine war. While market observers are not pressing the alarm button yet –as they claim the world’s dependency on Russia and Ukraine for critical raw materials needed to make chips and semiconductors is still minimal or manageable – Indian businesses reliant on semiconductors for their products would be closely watching the developments while working on their contingency plans in the background.
These global developments will test the agility, adaptability and preparedness of Indian companies.