India’s love of devalued Russian oil is widening its trade deficit with Moscow, the victim of which is India’s much-touted rupee trade scheme.
The gap between exports and imports is widening, making local currency payment mechanisms futile, said people familiar with the matter, who asked not to be identified. The payments have not started because Russian banks do not want to accumulate too many rupees, they said.
new DelhiImports from Russia from August to November were nearly 16 times more than shipments to the country, according to Ministry of Trade data.war with Russia UkraineIt led to US-led sanctions.
A slow progress in the rupee trade with Russia could add to the pressure on the local currency, which has fallen the most against the dollar among emerging Asian currencies in the past 12 months. India is betting on the internationalization of the rupee to reduce demand for the dollar and reduce the economy’s vulnerability to subsequent global shocks. current account deficitThe , the broadest indicator of trade in goods and services, hit a record high from July to September.
Officials from both countries last month discussed ways to boost exports to Russia in areas such as electronics.
A plan to allow foreign trade to be settled in rupees was announced by the Reserve Bank of India in July. Seven months later, the mechanism is primarily limited to payments for imports of defense equipment, officials said.
Paying in rubles is also a challenge, as the ruble does not have a fixed exchange rate, said an official of Bharat Petroleum Corporation, who requested anonymity. pegged to the dollar. Reliance Industries Ltd., India’s largest company by market value, and his BPCL have announced that they are using dirhams to pay for some shipments of Russian crude oil as they navigate Western sanctions. is one.
A spokesman for India’s Ministry of Foreign Affairs and Trade did not immediately comment on the matter.
Russia is now India’s largest crude oil supplier, overtaking Iraq and Saudi Arabia. In December, the South Asian country purchased 1.2 million barrels of crude oil daily from Russia.
Crude oil continues to dominate bilateral trade, but imports of goods such as sunflower oil and fertilizer have surged in recent months. As a result, India’s imports from Russia increased by more than 400% year-on-year in the eight months to November, while exports fell by 14% year-on-year, with the government’s efforts to improve outbound shipments yielding little results. not raised.
“As far as we know, there has never been a transaction in Indian rupees,” said Ajay Sahay, Executive Director and Chief Executive Officer of the Federation of Indian Export Organizations.