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Home News India, Russia in search of alternative payment system, shipping access for trade

India, Russia in search of alternative payment system, shipping access for trade

India being a Russian large trade partner is trying to continue bilateral export-import activities through alternative ways and means amid various types of sanctions on Moscow imposed by western nations.

As the major global shipping lines, mostly owned by the west, have suspended calling Russian ports, virtually halting any export-import trade with Moscow by any, the government of India has formed a committee to help the Indian traders find out ways to access shipping facilities.

On 7 March, the Indian Directorate General of Shipping issued a notification on the formation of the four-member body, headed by the chief executive officer of the Indian National Shipowners’ Association Anil Devli, which will also be manned by representatives of Shipping Corporation of India, Association of Multimodal Transport Operators of India, and Federation of Freight Forwarders’ Associations in India.

The notification mentioned that the committee is formed in the wake of the Russia-Ukraine crisis and the requirement of vessels to conduct export-import trade with Moscow.

The committee has been asked to interact with the shippers to find suitable vessels for their requirements for the continuation of the trade.

The crisis deepened as India has a very small fleet totaling 0.8% of world tonnage and has no international standard liner service. Moreover, the Russian liners are failing to make voyages due to the strict sanctions. Many global ports are not allowing Russian vessels and many of its ships are stuck in various points, including at the Black Sea and Sea of Azov due to blockades created.

Amid the situation, the freight rates from India are surging and exporters and importers fear it may skyrocket soon if the war situation and sanctions prolong.

Meantime, the committee has decided to meet thrice a week to find ways to resolve the vessel crisis.

India has annual trade of US$8 billion with Russia of which import is around US$5.5 billion with its import governed by oil and diamonds while top exports are pharmaceuticals and machinery.

Moreover, India and Russia are in talks over the launch of an alternative payment system avoiding SWIFT, which has blocked many Russian banks from its messaging system halting fund transfer, where the banks of the two countries will transact Rupee and Rouble based on their day’s exchange rates.

Under the plan, two Russian banks-- Sberbank and VTB-- have been identified by the government and the Reserve Bank of India through which the transactions will be made against the export-import trades.

These banks will convert Rupee and Rouble into Indian rupee and the total money will be deposited in an Indian bank account through which the entire bilateral transactions will be made.

However, a final decision to make the new mechanism operational is now awaiting approval from the Indian government.

Sharar Nayel
Asia Correspondent

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