India runs a huge trade deficit with Russia — in 2023-24, trade between the two countries touched $65 billion, of which India’s exports were just $4 billion and imports $61.4 billion.
Around 90% of trade between India and Russia is now being conducted using local or alternate currencies while the remaining still happens in other freely convertible ones, Russian Deputy Prime Minister Denis Manturov said Tuesday.
“Share of local and alternative currencies keeps growing in bilateral trade. It is now approaching 90%. We deem it necessary to continue our work on expanding correspondent relations between Russian and Indian banks,” he said in his opening remarks at the 25th Session of the India-Russia Intergovernmental Commission on Trade, Economic, Scientific, TEchnical and cultural cooperation here.
India took the first step towards enabling trade settlement in local currency when the Reserve Bank of India (RBI) in July 2022 permitted the invoicing and payment of international trade transactions in rupees. This move followed the start of the Ukraine war and shutting out of Russia from international payments and settlement systems.
Other countries whose banks have opened rupee accounts with correspondent banks in India are Bangladesh, Belarus, Botswana, Fiji, Guyana, Israel, Kazakhstan, Kenya, Malaysia, Maldives, Mauritius, Myanmar, New Zealand, Oman, Seychelles, Sri Lanka, Tanzania and Uganda.
The Russian deputy minister and India’s External Affairs Minister S Jaishankar also talked of diversifying the bilateral trade which is dominated by petroleum, coal and fertilisers and making progress on the proposed free trade agreement between India and the Eurasian Economic Union (EEU). The EEU has Russia, Belarus, Kazakhstan and Armenia as members. There has been one round of talks on the agreement already.
Apart from the FTA, both countries are also looking at a bilateral agreement on services and investments. India runs a huge trade deficit with Russia — in 2023-24, trade between the two countries touched $65 billion, of which India’s exports were just $4 billion and imports $61.4 billion. In April-August imports from Russia were $27.3 billion while exports were $2.2 billion. Apart from crude oil, coal and fertilisers, Russia has also become an import source of sunflower and soybean oil. Russia’s imports from India include food products, industrial equipment, components, pharmaceuticals and substances.
“Tasks on further expansion of product range as well as shortening the trade imbalance will be enshrined in the programme of development of promising areas of trade and development by 2030,” Manturov said.
Both sides are targeting bilateral trade of $100 billion by 2030 and Jaishankar said that this target will be achieved before that.
“Looking ahead we are also exploring mobility of talent and skill. Customising them for the Russian market,” he added..
Manturov also sought resumption of flights by Indian carriers to Russia. Right now direct flights are operated solely by Russian airlines Aeroflot.
He said India is a crucial partner on strategic projects in international logistics like the Northern sea route and North South corridor. Introduction of new routes including container routes which would significantly reduce logistics costs, he added.
The Russian deputy PM also said that his country was interested in expanding cooperation in the nuclear field including completion of the Kudankulam project and for technological sovereignty cooperation in engine building and micro electronics, outer space including supplies of equipment and components for Gaganyaan, and projects in satellite navigation are in advanced stages.
“We are conducting work on creating joint production of high-speed electric trains for Indian railways within Made in India. Among priority areas in chemical and metallurgical industry Digital technology,”
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