India’s rupee trade settlement with Russia to begin this week: Report

Indian exporters are expecting that the payments for shipment to Russia is going to be settled in rupees this week, as stated in a report by Mint. This will mark the first time such a transaction will take place since the introduction of trade settlement in rupee by the Reserve Bank of India (RBI). According to the Mint, Indian exporters are facing a rise in the cost of shipping goods to Russia with state-run Sberbank charging a premium of 4 percent on the settlement of these trades at a time when India’s trade deficit with Russia has widened. A government official told Mint on the condition of anonymity that five-six banks had been allowed to open Vostro accounts for rupee trade settlement, and so far, 10-11 such accounts have been opened. The official added that with Russia, the imports from India are 10 times the exports, but there is a likelihood of an increase in the country’s exports to Russia. “When they are holding much of the Indian rupees, either they will want to invest in capital in India or they will increase our exports,” he said. India’s exports to Russia are declining as exporters are wary of the western sanctions and lack of a smooth payment system. On the other hand, the sanctions-hit nation has swiftly become the top oil supplier of India. India’s exports to Russia stood at $1.29 billion between April and September, against the exports of $3.25 billion during the last fiscal year. However, imports from Russia have increased five-fold in the first five months of the fiscal year to $17.23 billion. Ajay Sahai, Director General of Federation of Indian Export Organisations (FIEO), told the media outlet that many issues have been sorted out, and that exporters and importers have started to approach the banks for opening accounts for the rupee settlement system. Sahai added that the trade settlement with Russia under the new payment system is likely to start from this week for some shipments. He added that similar types of sanctions are on Iran as well but the difference with Iran is that India is not importing oil and fertilisers from Iran like it is doing with Russia, and hence the Vostro account is dry. Read all the Latest News , Trending News ,  Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.