Rupee-denominated exports may soon touch USD 8-10 billion on the back of strong demand for Indian goods from Russia and the completion of groundwork by both governments to create a new regime in international trade, a senior official of the Federation of Indian Exports Organisations (FIEO) said.
Russian lender Gazprombank has already opened a special Rupee account with UCO Bank. On Wednesday, India notified that exporters will receive all stipulated benefits under the foreign trade policy for export realisations in domestic currency after the Commerce ministry desired to promote international trade settlement in Rupee.
Exporters were apprehensive to proceed with the Rupee trade settlement without clarity on the benefits of RoDTEP / RoSCTL schemes and the duty drawback normally available for exports in foreign currency.
“Indian currency-denominated exports will reach USD 8-10 billion soon. Russia requires everything under the sun from India. There are strong inquiries in various sectors. Exporters were waiting for the government to allow benefits under Rupee and banks to commence the process of transactions,” FIEO Director General & CEO Ajay Sahai told PTI. Currently, India’s exports to Russia are around USD 3 billion.
Sahai expects that the Rupee trade mechanism would commence within the next fortnight after banks like UCO starts actual processing.
He stated that imports from Russia have increased by 400 per cent, primarily from oil imports and, except for tea, coffee, tobacco, sugar and inorganic chemicals, exports were declining to Russia.
However, once the Rupee settlement system becomes operational on the ground, the widening trade balance will narrow.
External Affairs Minister S Jaishankar took up the trade deficit and market access issues with his Russian counterpart in a recent meeting.
On the 2022-23 export target of India, Sahai said, “Amid global challenges with inflation, rising interest and demand, an Indian export target of USD 750 billion will be attained in the current fiscal on the heels of strong service growth.” Exports of merchandise will cross over USD 450 billion, expecting a 6.6 per cent rise over FY’22, while services are projected to grow at 30 per cent to reach over USD 330-340 billion.
Till September, exports of goods accounted for USD 232 billion and services were worth USD 150.4 billion, Sahai stated.
“India is in a sweet spot despite global geo-political obstacles. Russian merchandise exports to Europe (other than oil and gas) are about USD 65 billion and this opens an immense opportunity for India to tap. Secondly, the China Plus One policy of the western world would also help India to grow its exports,” Sahai said.
Currency volatility impacts exporters, but he lauded the RBI for its balanced intervention to stabilise the currency. Though Rupee had depreciated over 8 per cent, that did not reap benefits to Indian exporters as currencies of other key Asian countries have lost value at a greater pace.
In the meantime, the head of FIEO called for a balanced approach to the steel export duty that India has imposed to control inflation.
“The government should review this. Some categories of steel, like stainless steel, where domestic demand is low and capacity have been created targeting exports. There should be a conscious call that after supplying to the end domestic users and meeting MSMEs, value-added steel products should be allowed to be exported unhindered,” Sahai said.