Despite US-led sanctions on Russia following its aggression in Ukraine, India has decided not only to continue, but to double its trade with Moscow in the “near future”.
The increase in trade volume between the two countries came mainly on the back of higher imports of discounted Russian crude oil by India.
India, which imported less than 1 percent of its total crude oil from Russia before the Russia-Ukraine war, now imports about 22 percent of its total needs from it.
Crude imports from Iraq and Saudi Arabia, which were the two major suppliers of crude to India, accounted for about 21 and 16 percent of India’s total imports, respectively.
“The Department of Commerce has indicated that it is ready to support this initiative, and based on the feedback from various exporters and business organizations, DOC is confident of doubling India-Russia trade in the near future and will further encourage it. Use of INR for trade settlement,” said the minutes of a high-level meeting in September on the issue of transactions in the Indian rupee – details of the meeting obtained by The Indian Express under the Right to Information Act.
Sanjay Malhotra, then Secretary, Department of Financial Services, and T Ravi Shankar, Deputy Governor, RBI, representatives of the Ministry of Commerce, Finance and External Affairs, RBI, Indian Banks Association, were present. and private and public banks. Ministry of Commerce was represented by Manish Chadha, Joint Secretary of the Ministry.
A meeting of the Department of Financial Services was called to discuss the issue of foreign transactions in the Indian rupee announced by the RBI in July.
While Russia is the first beneficiary of this trade arrangement, the Maldives, Sri Lanka and other countries in Southeast Asia, Africa and Latin America have also expressed interest.
On November 9, External Affairs Minister S Jaishankar and Russian Foreign Minister Sergey Lavrov met in Moscow and India made it clear that it would continue its purchases from Moscow.
“…as the world’s third largest consumer of oil and gas, a consumer with low income levels, it is our fundamental obligation to ensure that Indian consumers have the best possible access to international markets on the most favorable terms. . And in that respect, quite honestly, we have seen that the India-Russia relationship has worked to our advantage. So, if it works to my advantage, I want to continue with it,” Jaishankar said in Moscow.
Since Russia’s invasion of Ukraine, Western countries led by the US have imposed sanctions on Moscow and the country has shut down the SWIFT messaging system (used by banks to pay in foreign currency for cross-country transactions).
Sanctions on Russia and India’s growing dependence on Russian imports were the main reasons behind denominating foreign trade in Indian rupees.
The trade value between India and Russia has already surpassed the level achieved in the last fiscal year when the trade value between the two countries stood at $13.12 billion.
In the first five months of the current fiscal, trade between the two countries was worth $18.23 billion – India’s imports from Russia were $17.23 billion, while exports to Russia were $992.73 million, resulting in a substantial deficit.
Heading into the G20 Summit in Bali, US Treasury Secretary Janet Yellen arrived in India on Friday with a high-level delegation for the India-US Economic and Financial Partnership meeting. The visit comes at a time when the US-led coalition is pushing for lower Russian crude oil prices. India’s position, for now, is to remain non-committed to any such pricing mechanism.