All the monetary love affairs between India and Russia
India has almost completed a rupee-ruble exchange mechanism that will allow it to continue trading with Russia. New Delhi sees Western sanctions as an opportunity to increase its economic presence in Moscow. All the details
India is about to announce, perhaps early next week, a rupee-ruble exchange mechanism that will allow for the continuation of trade with Russia, sanctioned by many countries – starting with the United States, the European Union and the United Kingdom – for the invasion of Ukraine. This was told to CNBC A Sakthivel, president of FIEO, an Indian government organization that deals with export promotion, with over two hundred thousand members.
HOW THE MECHANISM WORKS
As explained by Sammy Kotwani, president of the Indian Business Alliance in Moscow, the mechanism will work something like this: "I can give rubles to Sberbank", a Russian state bank, "and they can give me rupees in India".
THE POSITION OF THE GOVERNMENT AND THE CENTRAL BANK
At the moment, however, neither the Indian central bank nor the Ministry of Finance have released comments on the mechanism in question, which effectively serves to circumvent the restrictions that the American coalition has applied to Russia, limiting its participation in the international payment mechanisms that they usually use the dollar.
THE WORDS OF SAKTHIVEL
Sakthivel had already told the Financial Times that "other nations are banning exports to Russia, so it is a good time for Indian exporters to enter the Russian market." He added to CNBC that “exports to Russia are not much, only in agriculture and pharmaceuticals. Now that the whole West is banning Russia, there will be many opportunities for Indian companies to enter Russia ”.
Sakthivel further explained that the proposal drawn up by the New Delhi government will allow four or five Indian state banks (such as the State Bank of India, the largest) to participate in the rupee-ruble exchange mechanism with Russia. There would be ongoing discussions between the banks, the central bank governor and the finance minister.
HOW MUCH THE INDIA-RUSSIA TRADE IS WORTH
In 2021, Russia's exports to India amounted to $ 6.9 billion and consisted mainly of mineral oils, fertilizers and rough diamonds. On the other hand, in the same year, Indian exports to Russian territory were worth 3.3 billion and consisted mainly of pharmaceutical products, tea and coffee.
BUT THE MOST IMPORTANT MARKET IS THE AMERICAN ONE
The main destination market for Indian exports is the US: in 2021 trade between the two countries was worth 112.6 billion; Indian imports were 41 billion and exports 71 billion.
WEAPONS, OIL AND NON-ALIGNMENT
However, India does not want to cut off relations with Russia, aligning itself with the West and part of Asia (above all Japan ), because Moscow is a very significant supplier of weapons: about 60 percent of Indian military equipment comes from there. , although the share of sectoral trade is shrinking and New Delhi is increasing purchases from the United States.
India also wants to take advantage of the context to increase imports – currently scarce: about 2-3 per cent of the total – of crude oil from Russia, sold at a lower price than Brent, the international benchmark . The country buys 80 percent of the oil it consumes from abroad.
The country's historical doctrine of non-alignment in the country's foreign policy, and its resistance to entry into formal alliance systems, also greatly influence India's posture with respect to the Russian-Ukrainian crisis.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/india-russia-accordo-rupie-rubli/ on Fri, 25 Mar 2022 13:54:58 +0000.