According to people familiar with the situation, India plans to increase shipments to Russia by $2 billion as the two countries work out a payment system in local currencies to continue bilateral trade in the face of sweeping international sanctions imposed on Russia for invading Ukraine.
To that end, Prime Minister Narendra Modi’s administration is in talks with Moscow to liberalise market access for a number of Indian-made products, according to people who asked not to be identified because the discussions are private. This comes as the two governments work on a proposal to settle trade in rupees and rubles, as well as ways to balance trade given India’s net importer of Russian goods.
According to sources, India is looking to export products supplied by countries that have halted shipments as a result of sanctions imposed by the United States and its allies.
Pharmaceuticals, plastics, organic and inorganic chemicals, home furnishings, rice, beverages such as tea and coffee, milk products, and bovine products are all on the list.
India has come under fire for increasing oil imports to take advantage of a drop in prices after the United States, Europe, Australia, and Japan imposed economic sanctions on Russia in response to its war in Ukraine. President Joe Biden met with Prime Minister Narendra Modi on Monday and told him that the United States is ready to assist India in diversifying its energy imports, reducing its reliance on Russia.
According to a trade department analysis, India can easily increase exports to Russia in the top 20 items it needs to import. Other items India wants to send to Russia include marine products, textiles and apparel, footwear, machinery, and electronics.
Currently, India’s exports to Russia total only $3 billion, compared to over $68 billion in shipments to the United States. It could be higher but for high logistics costs, sanitary regulations, a language barrier, and lower allocations in government procurement done by Russian state-owned enterprises. Total bilateral trade between the two countries reached $11.8 billion in the first 11 months of 2021, up from $8.1 billion in the previous full year.
