Indian exporters fear $400 mn stuck in Russia as West blocks its banks

While exporters will get more clarity on the impact when finer details of SWIFT ban are spelt out, they have had discussions with govt to deal with payment-related challenges

With western nations deciding to block many Russian banks from accessing the SWIFT international payment banking system, following Russia’s invasion of Ukraine, Indian exporters fear roughly $400 million may get stuck.

While exporters will get more clarity on the impact when the finer details of the SWIFT ban are spelt out, they have had discussions with the government to deal with payment related challenges. One of the options could be to restore the rupee-rouble payment mechanism with Russia, an industry official said, adding that the department of commerce is looking into the concerns of the exporters and is likely to come up with some measures soon.

Exporters are also hoping for a wind-down period will be available in the sanctions, which will take care of trade transactions in the pipeline.

World’s largest container lines such as Maersk, MSC have already temporarily suspended cargo shipments to and from Russia. As a result, goods are not moving and freight rates have further shot up.

Earlier this week, finance minister Nirmala Sitharaman had expressed concern over the future of exporters owing to the Ukraine crisis as this is set to jack up international freight rates and crude prices further. She had also asked the Indian industry — engaged in the war-torn region — to come up with suggestions to tide over the crisis and expressed worry about essential items like sunflower oil and fertilisers for which the country is dependent on the region.

Russia is India’s 25th largest trading partner as of 2021-22, with the size of the total trade at $9.4 billion during the first three quarters of the current fiscal. Its share of exports compared to India’s total exports at less than one per cent. Imports from Russia have a share of 1.27 per cent. Trade balance has been in favour of Russia, at least in a decade.

Electrical machinery and equipment, nuclear reactors, pharmaceutical products, iron and steel, organic and inorganic chemicals are the top items exporters to Russia. In case of imports, key items include mineral oils, vegetable fat, fertilisers and rubbers.