The government isn’t planning to undertake bilateral trade with Russia through a rupee-rouble payment mechanism in the wake of the Ukraine crisis, commerce secretary BVR Subrahmanyam said on Wednesday.
He, however, said the government is trying to ensure payments for exporters, who had supplied goods to Russia before the war broke out in late February, are not stuck.
“All we are trying to do is to facilitate the payment for our exporters. Even this is not being done through the rupee-rouble mechanism but by involving non-sanctioned (Russian) banks. The panel of secretaries that is looking into this issue, of which I am a member, isn’t considering any such proposal (rupee-rouble trade),” Subrahmanyam said, scotching reports in a section of media that India may get into such an arrangement with Russia.
FE was the first to report on April 6 that, after weeks of uncertainties, 35 of the 56 major exporters to Russia, identified by the commerce ministry, had just received payments. Sources had then said Russian importers were making payments in the euros through banks like Gazprombank that were outside the ambit of western sanctions. Some Indian exporters had earlier claimed that $400-600 million in payment was stuck, although there was no official word on it.
“Once the (Russian) importers deposit the euros there, the correspondent Indian banks convert them and release payments to relevant Indian exporters in the rupees,” said one of the sources. These payments are meant for goods already despatched before the war, the sources had said. “Fresh supplies (after the war) to Russia are very limited, and exporters are trying to ship some goods to Vladivostok port there (through China). However, shipping lines are reluctant to offer services there now,” one of the sources had said.
India mostly buys petroleum products, diamonds and other precious stones and fertilisers from Russia. Similarly, it ships out capital goods, pharmaceutical products, organic chemicals and farm products to Moscow.
Capital goods and certain consumer products made up 25% of India’s exports to Russia in the first three quarters of this fiscal, while pharmaceutical and organic chemicals accounted for over 22% and farm items 18%.
India, European Union to resume FTA talks in June
The commerce secretary said India and the EU are set to start the fresh round of negotiations for a free trade agreement (FTA) in June. Earlier this month, Subrahmanyam visited Brussels to set the stage for the talks.
On Wednesday, commerce and industry minister Piyush Goyal held a meeting with a Parliamentary delegation of the EU in New Delhi.
After 16 rounds of talks between 2007 and 2013, formal negotiations with the EU for the FTA were stuck over stark differences, as Brussels insisted that India scrap or slash hefty import duties on sensitive products such as automobiles, alcoholic beverages and cheese, among others. New Delhi’s demand included greater access to the EU market for its skilled professionals, which the bloc was reluctant to accede to. Last year, both the sides announced the resumption of formal negotiations after eight years.