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Thu, 03/03/2022 - 21:30

India Explores Alternative Means to Continue Trade With Russia Despite Western Sanctions

Trade between India and Russia stood at more than $10 billion in 2021. As the US and its allies announced sanctions against Russian financial institutions, Indian exporters rushed to the government to provide an alternative way to minimise their trade losses. The Indian government has begun exploring various ways it can help its exporters continue trading with sanctions-hit Russia. India's Commerce and Trade Ministry has given assurances to exporters dealing with Russia, and sources told Sputnik that the Reserve Bank of India - the country's central bank - has been questioning Indian banks about their transactions with Russian lenders and how to avert sanctions. "The absolute cessation of trading with Russia is not feasible. We need petroleum products and the raw ingredients of fertilisers such as potash and magnesium from Russia. Similarly, India will export pharmaceutical items to Russia. On humanitarian grounds, we can trade these items with waivers," a government official told Sputnik on Thursday. The government official said that exporters are looking forward to trading in national currencies as sanctions imposed by the US and its allies made dollar transactions difficult. Exporters have advised the government to channel payments through third-party countries which welcome Russian and Indian banks. India's UCO Bank based in Kolkata city is likely to be used as a financial institution to make payments of Russian orders. The small state-owned bank has been used as the payment bank for Iranian products, including oil, since 2012 when the US imposed severe sanctions on Tehran because of the latter's nuclear programme. The bank has limited exposure to the West and easily avoids sanctions. On Wednesday, Russia's ambassador-designate to New Delhi, Denis Alipov, said that the bilateral trade would largely depend on the readiness of "Indian partners" to continue with the engagement. "We have bilateral mechanisms and means of doing business in national currencies. Much will depend on the readiness of the Indian partners to continue the business because some of them are over-cautious as regards their exposure to the US and European markets." Denis Alipov Russia's ambassador-designate to India Government sources in New Delhi said that the two countries had devised a mechanism in 2020 to carry out transactions with Russia. New Delhi paid for the S-400 deal in national currencies to avoid sanctions. "It is too early to assess the exact effect of sanctions since every day, one or another country announces sanctions. Let them exhaust themselves with all their sanctions and then we will come up with a concrete solution," another government official told Sputnik on Wednesday. The fertiliser ministry called a meeting of industry representatives on Friday to discuss various options for unhindered materials supplies from Russia and Belarus. The commerce and industry ministry is also keeping an eye on shipping containers for transportation as the three biggest firms announced a temporary suspension of cargo shipments to and from Russia over safety concerns. Swiss-headquartered MSC introduced "a temporary stoppage on all cargo bookings to or from Russia, covering all access areas including the Baltics, Black Sea and Far-East Russia" from 1 March. Denmark's Maersk firm also stopped all container shipping to and from Russia. However, it agreed to continue delivering foodstuffs and medical and humanitarian supplies. After Russian President Vladimir Putin launched special military operations at the request of the people's republics of the Donbass region, the US and some of its allies slapped sanctions on certain Russian lenders. The balance of bilateral trade is in Russia's favour: Russia exports commodities each year to India worth around $7 billion whereas India's annual exports to Russia are approximately $4 billion. Read more: