Trade Relations between Russia and India flourish – deals drawn to sidestep sanctions
According to media reports, Russian importers are collaborating with small Indian businesses to secure fresh produce, auto parts, medical devices, and other key goods that are growing scarce due to international sanctions. Private sector players in Russia have met with potential suppliers in India’s big cities and are opening specialized bank accounts at home for roubles-to-rupees transactions. The two countries’ government has blessed the act, as per sources.
Russian Sanctions Explained
Relations between Russia and Ukraine have been hostile since the 2014 Ukrainian revolution, followed by Russia’s annexation of Crimea from Ukraine. When Russia seized Ukraine’s southern region of Crimea, it triggered a separatist rebellion in the east and a war that claimed 14,000 lives.
Since the war, the Ukraine conflict has dragged on, and sanctions have been tightened around Russia’s economy. The stakes have risen both for Russian businesses needing overseas goods and big global companies wanting to avoid those businesses, lest they run afoul of sanction rules.
How did Russia connect with India?
India is one of the most major world economies to continue trade with Russia. This has put the spotlight on small and medium enterprises (SMEs) as a potential trade route that, while limited in size, could remain under the sanctions radar. A senior Indian foreign ministry official based in New Delhi said:
It is absolutely clear that large Indian conglomerates having exposure to the West will not conduct business with Russian companies. But SMEs can export and settle payments through banks that are not under the Western sanctions regime.
The official further said:
Representatives from Russian chambers of commerce were travelling to New Delhi, Mumbai, and Bengaluru to identify companies willing to set up new subsidiaries or joint ventures to export goods to Russia. They are especially seeking consumer durables, spare parts for the transport sector, medical devices, construction materials for large infrastructure projects, and frozen food ahead of the winter season.
While the trade information has been confirmed, experts are curious to know where does this collaboration lead? Only time will unveil what becomes of these trade relations in the future.
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