Russia's ongoing conflict with Ukraine and the resulting international sanctions have significantly impacted India's export landscape. Over the past financial year, India saw a substantial increase in the export of engineering goods, machinery, machine parts, and aircraft spares to Russia, while traditional exports such as pharmaceuticals, tea, coffee, and tobacco either stagnated or declined, reported TOI.
Despite the growing interest from Russia to import Indian goods, exporters face challenges due to the fear of sanctions and the reluctance of banks to process transactions.
Industry experts suggest that some goods destined for Russia may be rerouted through the UAE, which has benefited from the geopolitical tensions between Ukraine and Russia.
Russia has become India's fourth-largest trading partner, with total trade estimated at $65.7 billion, driven largely by substantial oil imports. However, this trade relationship has also resulted in India having a significant trade deficit with Russia, second only to China, standing at over $57 billion.
There has been some movement towards allowing Russian exporters to invest more freely using rupee payments, facilitated by mechanisms already in place by the Reserve Bank of India (RBI).< ..
Indian exporters remain cautious, primarily due to banks' hesitancy to engage in transactions that might attract sanctions.
The auto components sector, which initially saw increased interest post-sanctions, has largely stayed away due to Indian companies' significant exposure to American buyers and global car manufacturers.
Official data from the financial year 2023-24 shows that exports to Russia increased by over 35% to $4.3 billion, even as India's overall goods exports declined by more than 3%. Of the $1.2 billion increase in exports to Russia, nearly half was attributed to machines and machine parts, including electronics, as per the TOI report.
Source Name : Economic Times