From farm and food products to pharmaceuticals and FMCG products, companies in sanctions-hit Russia have evinced unusual interest in sourcing a broad range of items from India but despatching goods to the country is easier said than done.
The vital Black Sea shipping route is blocked, while top global shipping firms have suspended “non-essential bookings” to and from Russia, and Indian exporters are grappling with an acute shortage of containers, trade and official sources told FE.
On top of these, most of the Russian importers are keen on paying in the rouble, which may discourage many Indian exporters, said one of the sources.
The latest firm to show interest in scaling up its imports from India is X5 Group, Russia’s top food retailer. It wants 8,000 tonne of shrimp, 2 lakh kg of tea and coffee, about two million rice packets, five million pieces of detergent powder and liquid, 1 lakh bottles of strong drinks (Rom and Whiskey), 1.2 lakh wine bottles, 80,000 pieces of textile products, five lakh litres of soda, one lakh litres of beer, among others, one of the sources said.
Already, a group of about 50 Indian exporters from the farm, food and chemicals sector are visiting Russia with an aim to “convert the enquiries into real contracts”, a senior industry executive said.
The Federation of Indian Export Organisations (FIEO), too, is facilitating interactions between the Russian importers and domestic suppliers.
However, exporters and official sources conceded that the supply-side challenges are too difficult to surmount at this point. “Some shipments (to Russia) are going through Turkey and some through China’s Qingdao port. But the important point is that most of the shipping lines are not operating (for exports to Russia), so the volume of despatches is pretty low at this point,” FIEO director general and chief executive Ajay Sahai said.
The world’s top three container lines — Swiss-headquartered MSC, Denmark’s Maersk and France’s CMA CGM — have temporarily suspended cargo shipments to and from Russia following Western sanctions in the wake of the Ukraine war.
According to Drewry’s composite World Container Index, global freight rates stood at $7,768 per 40-ft container as of April 28, up 56% from a year before.
Indian suppliers have received a lot of enquiries and these will first have to be converted into orders. “Shipping cost is very high. Even if orders flow in, logistics challenges are there. But the good thing is that payment (for supplies made before the Ukraine war) has started flowing through non-sanctioned Russian banks,” he added. However, exporters want to get into deals early, so that, in that event of cessation of violence in Ukraine, goods can be despatched swiftly.
In a communication to its members on April 7, state-backed pharma export body Pharmexcil has said the Indian embassy in Moscow has been approached by Russian firms. “While some of them required assistance in getting suppliers of some particular pharmaceuticals, others are interested in distributing them,” it said. The Russian companies that have shown interest include New Technologies, Pharmstandard, Appolo, Pharmamed and Simkodent.
While farm products made up 18% of India’s $3.2-billion exports to Russia between until February last fiscal, pharmaceutical products accounted for almost 15%. India still had a goods trade deficit of $5.5 billion with Russia between April and February of FY22.