NEW DELHI: India and Russia have devised a novel solution to the payment problem they faced after the Western sanctions against the latter following the Ukraine invasion. The workaround is to invest the bulk of Russian earnings from India in setting up industries in India to manufacture products that can be exported to the Russian Federation.
India’s imports from Russia increased four times over the last financial year to $46 billion as Russia replaced Iraq as India’s top crude oil supplier last month. India is trying to get Russia to accept payments in rupee. Russia is against it, saying it has no use for such huge sums of Indian currency as its imports from India are only a fraction of what its exports to the country earn.
While talks are on for reviving the rupee-rouble trade, the two countries have quickly moved to implement their new understanding. Sources said Russia plans to spend much of its earnings from India to set up facilities in India that will export hundreds of items manufactured by its fully-owned companies or by joint ventures.
A large delegation of top Indian private defence manufacturers visited Russia last week to explore possibilities of tie-ups, and at least three Russian business delegations visited India over the last three weeks. They included senior Russian ministers and business leaders.
A 190-member business delegation representing 128 Russian companies visited India earlier this month. Russian Chamber of Commerce and Industries president Sergey Katyrin headed this group. The FICCI organised B2B meetings between visiting Russian business people and Indian industrialists.
This was followed by Russian Deputy Prime Minister Denis Manturov’s visit. Both sides are exploring cooperation in transport and machine building, chemicals, pharma, metallurgy and materials, digital technologies, energy, finance and trade.