Sanctions-hit Russia asks India for parts for key sectors, say sources

Moscow has sent a list of over 500 products, including parts for cars, planes and trains, to India for possible delivery, as sanctions reduce Russia’s ability to keep vital industries running.

External Affairs Minister S Jaishankar (left) with his Russian counterpart Sergei Lavrov at a press conference in Moscow, Russia. During the Moscow visit, Jaishankar said that India needs to increase exports to Russia to balance bilateral trade which is now tilted towards Russia. (Photo: Reuters)

by Reuters,

Moscow has sent India a list of more than 500 products for possible delivery, including parts for cars, planes and trains, four sources familiar with the matter said, as sanctions reduce Russia’s ability to keep vital industries running .

The list, a version of which has been seen by Reuters in New Delhi, is provisional and it is unclear how many items will eventually be exported and in what quantities, but an Indian government source said the request was unusual in its scope.

India is keen to promote trade in this way, the source said, as it tries to narrow the growing trade deficit with Russia. However, some companies have expressed concerns about possible violations of Western sanctions.

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An industry source in Moscow, who declined to be named because of the sensitivity of the issue, said Russia’s Ministry of Industry and Trade has asked large companies to supply lists of raw materials and equipment.

The source said further discussions would be needed to agree on the specifications and quantities and that the outreach is not limited to India.

Russia’s Ministry of Industry and Trade and the Indian Ministries of Foreign and Commerce and the Prime Minister’s Office did not immediately respond to requests for comment.

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The requests to Russia were made weeks before Indian Foreign Minister Subrahmanyam Jaishankar’s visit to Moscow starting on November 7, two Indian sources said. It was not immediately clear what message New Delhi conveyed to Russia during the visit.

Prime Minister Narendra Modi’s government has not joined Western countries in openly criticizing Moscow for the war in Ukraine, and has sharply increased purchases of Russian oil that have shielded it from some of the effects of sanctions.

During the Moscow visit, Jaishankar said that India needs to increase exports to Russia to balance bilateral trade which is now tilted towards Russia.

He was accompanied on the tour by senior officials in charge of agriculture, petroleum and natural gas, ports and shipping, finance, chemicals and fertilizers, and trade – which he said showed the importance of ties with Russia.

Russia’s struggle

Western sanctions have crippled the supply of some vital products to Russia.

Airlines are facing acute shortage of spares as almost all aircraft are foreign-made. Car parts are also in demand, with global automakers leaving the market.

A source in Russia’s car sales industry said the trade ministry had sent a list of car parts to relevant ministries and state agencies in other countries, including India.

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Russia’s list of items, which runs for nearly 14 pages, includes car engine parts such as pistons, oil pumps and ignition coils. Bumpers, seatbelts and infotainment systems are also in demand.

For aircraft and helicopters, Russia requested 41 items including landing gear components, fuel systems, communication systems and fire extinguishing systems, life jackets and aviation tyres.

The list also contained raw materials for making paper, paper bags and consumer packaging and materials and equipment for making textiles, according to the document reviewed by Reuters.

Russian metals producers such as nickel and palladium giant Nornickel have said Western sanctions and self-approvals by some suppliers make it difficult for industrial companies to obtain imported equipment, spare parts, materials and technologies in 2022, increasing their Development programs are getting challenged.

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The catalog includes approximately 200 metallurgical items.

Russia has been India’s largest supplier of military equipment for decades and is the fourth largest market for Indian pharmaceutical products.

But with Russian oil purchases increasing and coal and fertilizer shipments also going strong, India is looking for ways to rebalance trade, the first Indian government source said.

Indian imports from Russia increased nearly five-fold to $29 billion between February 24 and November 20, compared to $6 billion in the same period a year ago. Meanwhile, exports have declined from $2.4 billion to $1.9 billion.

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According to a government source, India is hoping to increase its exports to around $10 billion in the coming months with a list of requests from Russia.

But some Indian companies are reluctant to export to Russia due to fear of being sanctioned by the West, lack of clarity on payments and challenges in securing insurance.

“There is a hesitation among exporters… especially on approved items,” said Ajay Sahai, director general of the Federation of Indian Export Organizations (FIEO). A body supported by the Ministry of Commerce of India.

Sahai, who is aware of Russia’s request, said small and medium-sized exporters who could meet some of the requests and had previously exported to Iran following Western sanctions were not enthusiastic.

Large Indian lenders are reluctant to process rupee trade transactions directly with Russia, months after the mechanism was put in place for fear of being approved.