After weeks of uncertainties, Indian exporters have started receiving payments for their goods despatches to Russia, with both the countries working towards resolving the payments issue that had hit the cash flow of scores of domestic traders.
As many as 35 of the 56 major exporters to Russia, identified by the commerce ministry, have received payments, a senior government official told FE. Others, too, are expected to get payments soon, he added. Some Indian exporters had earlier claimed that $400-600 million in payment was stuck, though there was no official word on it.
Russian importers have made payments in euros through banks like Gazprombank that are outside the ambit of western sanctions, according to sources. This has made it easy for Indian banks, who had put on hold fresh deals with Russian lenders after the Ukraine war, to get into transactions with them.
“Once the (Russian) importers deposit the euros there, the correspondent Indian banks convert them and release payments to relevant Indian exporters in the rupees,” one of the sources said. “We have about 100 authorised dealers-category-1 banks, which are allowed by the RBI to undertake capital and current account transactions. These banks can act as the correspondent banks,” he added.
An exporter said the visit of Russian foreign minister Sergei Lavrov last week also “had a positive impact on bilateral trade and payment issues”. “If European countries can still deal with Russian suppliers, why shouldn’t we do business with the Russians?” he asked.
However, the sources said these payments are meant for goods already despatched before the war. “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 said.
Last week, Lavrov also pitched for a rupee-rouble mechanism to trade oil, defence equipment and other goods between the two countries.
Already, following Russia’s attack on Ukraine, the US and its European allies decided to block certain Russian banks from the SWIFT financial-messaging infrastructure for cross-border payment. VTB, Russia’s second-largest bank by assets, VEB, another big player, and five smaller ones have been cut off from the SWIFT. This adversely affected various countries’ trade transactions with Russia.
New Delhi buys substantially more goods from Moscow than what it ships out to the latter (its bilateral trade deficit stood at $4.34 billion in the first three quarters of FY22). So, payments shouldn’t be an issue, if a proper rupee-rouble architecture is worked out, exporters have 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%.