While it’s a fundamental decision by both sides, it is necessary to address the imbalance in trade for a full-fledged transition to national currencies, Zamir Kabulov, head of India division in Russia’s ministry of foreign affairs, said.
Officials are currently trying to address this issue, the Russian diplomat who is also its special envoy for Afghanistan told Russia’s state-run news agency RIA Novosti.
India currently buys from Russia five times more than it sells.
The move to address trade imbalance would involve expansion of Indian exports to Russia based on Moscow’s request for exports of certain items, ET has learnt.
Foreign minister S Jaishankar had discussed the issue to increase Indian exports to Russia during his Moscow visit last month.
India’s trade with Russia is growing, led mainly by the energy sector but also involves fertilisers, coal, coking coal among other commodities. Bilateral trade has reached $27 billion this year mainly due to imports of large volumes of oil and fertilisers from Russia.
India’s ambassador to Moscow Pavan Kapoor suggested that “Russian businessmen look at India as the main source of their activities” to make trade between the two countries “more balanced”. , “This concerns not only pharma, but also agricultural products, ceramics, and chemical products,” he said.
“We are trying to conduct as many transactions in national currencies as possible, for which balanced trade is required as one side accumulates more, while the other [accumulates] less, and we should search for solutions to this situation,” Kapoor said at Russia-India Business Dialogue Forum on Thursday.
He suggested several ways to balance two-way trade, including the use of surplus rupees accumulated by Russian banks in India for imports from India and investments in manufacturing backed by the production-linked incentive (PLI) scheme.
If the two countries switch to rupee-rouble settlement without addressing trade imbalance, then Russian banks that accept rupee payments from Indian buyers and release the corresponding amount to Russian sellers in rouble will see a huge pile-up of the rupee even after buying back all the rouble Russian buyers pay for Indian products and services. Meanwhile, Indian exporters and investors are being encouraged to expand trade and invest in Russia.
The ninth session of India-Russia Working Group on Modernisation & Industrial Cooperation of the India-Russia Intergovernmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation was held here on Friday to push bilateral trade.
Anurag Jain, secretary of the Department for Promotion of Industry and Internal Trade (DPIIT), and Alexey Gruzdev, deputy minister of industry and trade of the Russian Federation, cochaired the session.
Russia has emerged as India’s fifth largest trading partner with bilateral trade of $22.7 billion during April-September this year.
The Reserve Bank of India (RBI) had in July this year introduced a new mechanism for international trade settlements in rupees, aiming to promote exports and facilitate imports.
The central bank has allowed HDFC Bank Ltd and Canara Bank Ltd to open a special ‘Vostro accounts’ for trade in rupees with Russia. Vostro accounts are held by a bank on behalf of another, often foreign bank, and this forms a key part of correspondent banking.
Russian energy major Gazprom has opened an account with UCO Bank while VTB Bank and SberBank have opened accounts with their own India-based branch offices. Commercial transactions to be settled in rupees will be done through these accounts.
.png?rect=0%2C25%2C666%2C350&w=1200&auto=format%2Ccompress&ogImage=true "Bangladesh Cancels -Million Order From Garden Reach Shipbuilders")
