Bilateral trade between Russia and India unlikely to be impacted amid sanctions
Last updated on October 26th, 2022 at 10:26 am
Ukraine –Economic sanctions against Russia by the western countries may not have an impact on the bilateral payments and bilateral trade between India and Russia because payments for imports and exports are made in the Indian rupee.
Recently, the United States (US) and other western countries imposed economic sanctions on Russia in the wake of the attack on Ukraine. Payments between India and Russia are made or received in rupee for shipments. According to the sources, sanctions by the West may not have an impact on the payments except exchange rate fluctuation.
Reportedly, Russia is one of the biggest suppliers of defence products and equipment to India. According to the Times of India, bilateral trade between India and Russia stands at USD 9.4 billion so far this fiscal year, against USD 8.1 billion in 2020-21.
India imports fuels, mineral oils, pearls, precious stones, nuclear reactors, boilers, mechanical appliances, electrical machinery and fertilisers from Russia. Russia imports pharmaceutical products, equipment, organic chemicals and vehicles from India.
Earlier, India had invented a mechanism to pay for imports from Iran when sanctions were imposed on Iran. India had agreed with Iran to carry out trade-related transactions through a rupee account. The account was used to make payments to Indian exporters for sending goods to Iran.
Recently, the European Union (EU) imposed sanctions on five Russian banks. The United States imposed sanctions against two large Russian financial institutions and Russian sovereign debt. The Russian government would be cut off from western financing because of the sanctions. Biden also announced sanctions on the Nord Stream 2 natural gas pipeline from Russia to Germany.
Russian President Vladimir Putin started military operations in Ukraine on Thursday. He said that he announced the military operation in Ukraine to protect civilians in eastern Ukraine. Putin accused the US and its allies of ignoring Russia’s demand to prevent Ukraine from joining NATO (North Atlantic Treaty Organisation) and offering Russia security guarantees.