Despite the sanctions imposed by the United States on Russia after its invasion of Ukraine, India has decided not only to continue, but also to double its trade with Moscow in the “near future”.
The increase in trade volumes between the two countries is mainly due to the sharp increase in imports of Russian crude at discounted prices by India.
India, which imported less than 1% of its total crude from Russia before Russia-Ukraine war, now imports about 22% of its total needs.
Crude imports from Iraq and Saudi Arabia, which were India’s two major crude suppliers, account for about 21% and 16%, respectively, of India’s total imports.
“The Commerce Department said it was ready to support the initiative, and based on feedback from various exporters and business entities, the DoC was confident to double Indo-Russian trade in the near future, and that would be further boosted by the use of INR for trade settlement,” said the minutes of a high-level meeting in September on the issue of Indian rupee trade – details of the meeting have been obtained by The Indian Express under the Right to Information Act.
Sanjay Malhotra, then Secretary, Department of Financial Services, and T Rabi Sankar, Deputy Governor, RBI, chaired the meeting which was attended by representatives from Ministries including Trade, Finance and External Affairs alongside those from the RBI, the Association of Indian Banks, and private and public banks. The Ministry of Commerce was represented by Manish Chadha, co-secretary at the ministry.
The Financial Services Department meeting was convened to discuss the Indian Rupee outbound trade issue announced by the RBI in July.
While the first beneficiary of this trade deal has been Russia, countries like the Maldives, Sri Lanka and others in Southeast Asia, Africa and Latin America have also shown interest.
On November 9, Foreign Minister S Jaishankar and Russian Foreign Minister Sergei Lavrov met in Moscow and India made it clear that it would continue to purchase from Moscow.
“…as the world’s third largest consumer of oil and gas, as a consumer whose income levels are not very high, it is our fundamental obligation to ensure that the Indian consumer has the best possible access on terms that are most advantageous to international markets. And in that regard, quite honestly, we have seen that the India-Russia relationship has worked to our advantage. So, if it works to my advantage, I would like it to continue,” he said. said Jaishankar in Moscow.
Since Russia’s invasion of Ukraine, Western countries led by the United States have imposed sanctions on Moscow and the country is off the SWIFT messaging system (used by banks for foreign currency payments for international transactions).
Sanctions against Russia and India’s increased dependence on Russian imports were the main reasons for the provision for foreign trade in Indian rupee.
The value of trade between India and Russia has already surpassed the levels reached in the last fiscal year when the value of trade between the two countries stood at $13.12 billion.
In the first five months of the current fiscal year, the value of trade between the two countries was pegged at $18.23 billion – India’s imports from Russia amounting to $17.23 billion, while exports to Russia amounted to $992.73 million, resulting in a substantial deficit.
On her way to the G20 summit in Bali, US Treasury Secretary Janet Yellen traveled to India on Friday with a high-level delegation for the India-US Economic and Financial Partnership Meeting. The visit came at a time when a US-led coalition was pushing for a price cap on Russian crude. India’s position, so far, has been not to commit to such a price cap agreement.