The fundamental impact on the economy of Russia will be the growth of opportunities for exporting its products to other countries, including India.ĭealing with the Russia-India trade imbalance Maharashtra was India’s richest state, followed by Delhi and Gujarat. The number of “super rich”, on the other hand, has risen to 1.8 million in 2020-21. India’s Business Standard confirms this view, saying that India’s middle-class reached 31% of the total population in the fiscal year 2021-22, about 500 million people. It has become easier for Russian traders and businesses to establish Liaison Offices in India, while the Indian middle-class consumer market is growing at a fast pace, he says. Russian clients may establish bank accounts if based in Delhi, while improved trade connectivity such as from India to Russia via the INSTC will also be a trade driver during 2023-24. Rohit Kapur, Managing Director of Dezan Shira & Associates New Delhi office handling Russian investors into the country, states that 2022 saw a significant increase in Russian investors to India. India has also not agreed to abide by Western sanctions against Russia. This growth is taking place against the background of India becoming the largest country in the world by population, and has great needs for the export of Russian energy resources and other products. These developments will undoubtedly influence Russia-India trade, but how much? Andrey Stolyarov, Deputy Head of the Department of Financial Markets Infrastructure at the Higher School of Economics in Moscow has stated that according to the results of the first half of the year, the trade turnover between Russia and India grew to US$11 billion, while there were already plans to increase this to US$30 billion by 2025. Other subsidiary industries are also taking off here – Indian and Russian shipbuilders are constructing new tankers, some of them with Arctic capabilities, again at the Gujarat shipbuilding yards, and cooperating in the leasing and construction of large bulk crude carriers. Gujarat is also the home state of the current Indian Prime Minister, Narendra Modi. Cooperation in this area will open doors for related Russian industries. More than 70% of India’s imported oil comes via Gujarat, meaning cooperation is increasing: the development of oil refining and petrochemistry, and access to the re-sale markets of the Asia-Pacific. One of the main areas of cooperation is in energy security, with Russia’s Rosneft acquiring 49.13% of the local oil refinery, prompting growing deliveries of Russian oil due to the favorable location of the refinery. Russian oil supplies pass through India’s West coast Gujarat state, where the Vadina refinery and the port are located. At the end of 2021, growth was already running at 46.5% in non-oil trade – although India has now become one of the main destinations of Russian oil exports, it previously occupied a very small share of Russia’s oil exports.īut oil has helped open up other doors. This can be expected to continue – India is currently negotiating a Free Trade Agreement with the Eurasian Economic Union – a deal that includes Russia.īilateral trade growth however is not just a result of cheap oil purchasing due to the Ukraine conflict. Russia and India’s bilateral trade turnover is also growing rapidly, up about 120% on 2021. Russia-India 2023-24 bilateral trade growth potential Six Indian banks has now received permission from the Indian government to open correspondent accounts in rupees by Russian banks to facilitate bilateral trade and arrange Rupee-Ruble ‘Vostro’ account transactions. However, the rupee is only a partially convertible currency, which has so far made it unattractive for use in foreign trade settlements, although this is starting to change. In addition, it is financially risky for Russian exporters to keep proceeds received from sales in hard currency due to the risks of blocking. How this decision is made will affect the Russian economy, increase the global process of de-dollarization and impact Russia-India trade turnover.Ī mutual decision to refuse US dollar and Euro trade with Russia is considered a necessary measure by New Delhi because otherwise, conducting financial transactions with Russian companies and banks have become impossible or extremely difficult due to sanctions. Russia and India have agreed to drop all use of the US dollar and Euro in bilateral settlements, according to a statement made by Zamir Kabulov, a Director of Russia’s Ministry of Foreign Affairs.Īccording to Kabulov, the transition to national currencies is a fundamental decision, while there is a need to maintain balance, as the sales volume of Russian products to India is five times higher than that of India to Russia. Bilateral trade set to boom in 2023-24 as numerous export multipliers come into the trade picture
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