Business as usual: Indian companies stay put in sanctions-hit Russia

Two countries commit to raise bilateral trade to $100 bn by 2030 as war in Ukraine continues

In 2020, American fast food chain McDonald’s completed 30 years in Russia. For celebration it sold burgers at their 1990 price of three roubles – a discount on the prevailing price of 135 roubles. McDonald’s left Russia in May 2022, three months after Russia invaded Ukraine. A Russian company took over McDonald’s stores and rebranded them as ‘Vkusno i tochka’ ('Tasty & That’s It').

Hundreds of companies have exited Russia or announced such a decision after the country came under Western sanctions, according to a database maintained by the Kyiv School of Economics Institute in Ukraine. British Petroleum, Russia’s largest foreign investor, took an estimated $25.5 billion hit on its books by leaving the country. Hundreds of companies have continued in Russia, including 74 out of the 78 Indian firms (95 per cent) for which data is available.

India is second to the United Arab Emirates and ahead of Turkey and China in terms of the share of foreign companies retaining operations in Russia. The analysis is based on 15 countries with the highest number of companies operating in Russia. The United States (US) had the highest number of companies in Russia and 57 per cent of them pulled out (chart 1, click image for interactive link).

In 2023, Indian firms in Russia recorded a revenue of at least $824 million based on available data.

Prime Minister Narendra Modi was in Russia this week for the first bilateral visit of his third term and the first since the Ukraine war began more than two years ago. The two countries agreed to raise bilateral trade to $100 billion by 2030.

Finance and payments is a key sector for global companies operating in Russia. Indian companies there do business in 26 sectors, with the highest number in energy, oil and gas. Pharmaceuticals/ health care and finance/ payments sectors in Russia have nine and eight Indian firms each, respectively (chart 2).

Around 400,000 people worked with US companies in Russia. Out of these, 64 per cent worked with companies that exited Russia, though some are said to have been absorbed by entities that bought out the foreign companies. Employees of Indian companies in Russia have seen limited impact (chart 3).

In 2023, foreign companies leaving Russia had a total revenue of $64.1 billion and assets worth $96.9 billion in the country.

Amid the war, Russia has experimented with capital controls.