As US sanctions on Russia take effect, a top exporters’ lobby has sought government support to protect against expected losses due to blocked payments or damage and delay in shipments to Russia.
The Federation of Indian Export Organisations (FIEO) has also requested a wind-down period to complete transactions currently under way. “In case shipments to Russia get destroyed during transit, exporters without a marine cover would face huge losses," Ajay Sahai, director-general and chief executive officer, FIEO, told Mint.
Exporters are worried that their payments may get stuck if Russia is shut out of SWIFT, a global financial messaging system, apart from damage or delay in shipments to Russia.
“The shipments which are at the ports or in voyage may be quickly cleared and loss to exporters, either during transit or in payment, maybe sympathetically considered by the government," A. Sakthivel, president, FIEO, said in a statement.
Meanwhile, the government on Friday opened a helpdesk to address trade-related concerns and reassure Indian traders.
“In view of the current international situation, the Department of Commerce and Directorate General of Foreign Trade (DGFT) have undertaken to monitor the status and related difficulties being faced by stakeholders on Russia/Ukraine trade-related issues. Through the helpdesk, the government aims to support and seek suitable resolutions to issues related to India’s international trade in this regard with immediate effect," an official statement said.
“A weekly meeting with concerned exporters/importers/other trade stakeholders will also be held by DGFT & FT(CIS) division of Department of Commerce every Monday," the statement said.
US president Joe Biden has announced harsh sanctions against Russia after it invaded Ukraine. Biden said the sanctions would limit Russia’s ability to do business in major currencies such as dollars, euros, pounds and yen.
Biden further said Nato would meet on Friday to map out further measures. He reiterated that the US would not engage in war with Russia, but that it would meet its Article 5 commitments to defend Nato partners.
The US has already imposed sanctions on the company building Russia’s Nord Stream 2 gas pipeline. Besides two large Russian financial institutions and Russian sovereign debt along with members of the Russian elite have also been hit with sanctions.
However, the direct impact on India’s trade is expected to be limited considering the small trading basket. Russia accounts for 0.9% of India’s total exports and 1.5% of total imports. Petro imports from Russia are also minuscule and can be replaced with other markets.
In FY21, India’s exports to Russia stood at $2.6 billion, while imports stood at $5.5 billion. India shipped $469 million worth of pharmaceuticals products and $301 million worth of electrical machinery to Russia.
Petroleum products made up for half of the imports from Russia. However, the $3.7 billion of petroproduct imports is minuscule against India’s overall $150 billion petroproduct imports.
