Indian exporters are facing mounting payment delays on shipments to Russia as sanctions widen and banks grow wary of handling transactions, prompting calls for a direct rupee–ruble exchange mechanism.
Banking hesitancy and the cost of currency conversion
“The rupee-ruble trade mechanism has not worked smoothly, and some multinational banks of Indian origin are reportedly not accepting payments from Russia and not issuing e-BRC as they are afraid of losing business in north America and Europe due to sanctions on Russia,” the Engineering Export Promotion Council (EEPC) highlighted at the Board of Trade (BoT) meeting on Tuesday.
Seeking a Solution
“There is a need to establish a robust and reliable direct rupee–ruble exchange mechanism for settling financial transactions between the two countries. This can be announced monthly, which will help the exporting community do business with Russia,” EEPC chairman Pankaj Chadha said.
More than 90% of India–Russia trade now uses local currencies. Exporters typically price in dollars but receive rupees, while Russian buyers convert from dollars to rubles and then rubles to rupees. The three-way conversion raises costs—a problem exporters say could be eased if both governments fix a rupee–ruble rate.
Payments are mostly routed through Sberbank and VTB Bank. Their parent entities face sanctions, though their Indian units do not. Limited routing options can push transaction costs as high as 4%, squeezing margins that often run below 10%. Other Russian banks are seeking licences to operate in India.
Volatility in the ruble has added pressure, while Indian banks have grown increasingly reluctant to process Russian payments. Exporters want permission to open additional current accounts with Indian branches of Russian banks, though they would still be unable to access credit and would need approval from their primary lenders.
Bilateral trade surged after the Ukraine conflict in 2022, driven by India’s pivot to discounted Russian crude. Trade reached $68.69 billion in 2024–25, with India’s exports at $4.88 billion and imports at $63.81 billion.