two Russian banks, Sberbank and VTB, have been identified by the Government and reserve Bank of IndiaHowever, a final decision on whether India will go this route or adopt any other plan is awaited.
“The decision will be taken at the highest level. We have identified the banks from the Russian side and will finalize the Indian counterpart soon,” said a government source.
As per the modalities proposed by a bank, an Indian exporter will have to sign another agreement with a Russian buyer. The buyer’s bank will then transfer the payment in rubles to the Russian bank’s branch in India at the day’s rate, which will then be transferred to the exporter’s bank in Indian rupees.
Assume Russia There is a trade surplus with India, there will always be some money in the Indian account, an official explained.
Industry sources said Russian banks have argued that there is no problem with the payment mechanism despite sanctions imposed by the US and its allies in Europe and also shared details on the proposed compliance norms.
A similar mechanism was tried with Iran about a decade ago, but when the sanctions were withdrawn, the Asian country had to leave, which until then was a major source of oil imports for India.
India’s trade with Russia was estimated at over $8 billion during the last financial year, with imports pegged at around $5. 5 billion. Oil and diamonds make up for most of the shipments in the country. Out of exports of $2. 5 billion, pharma and machinery were the top items.
The government is looking at payment options to ensure that Indian exporters get their dues of $400-500 million at the earliest. In addition, Russian oil companies and diamond traders have realized that they are ready to supply both products.
Apart from payment, the government will also have to take care of shipping channels and insurance cover for shipments.