Russia’s trade with India has seen a significant increase, nearly doubling to $65 billion in 2023. This boost in trade can be attributed to India emerging as a major importer of Russian oil, especially after Western sanctions were imposed in 2022 due to a conflict in Ukraine. Anatoly Popov, the deputy CEO of Russia’s largest lender, Sberbank, highlighted the smooth bilateral payments process with India, which stands in stark contrast to the issues faced with other trading partners.
Sberbank, which handles payments for up to 70% of all Russian exports to India, has played a crucial role in facilitating these transactions. Despite being under Western sanctions and unable to make transactions in U.S. dollars and euros, Sberbank has not encountered any hindrances in its operations in India. With branches in Delhi and Mumbai, as well as an IT center in Bangalore, Sberbank has expanded its presence in India significantly, with a 150% increase in staff in its Indian offices this year.
Transactions between Russia and India are running smoothly, with 90% of them being completed within a few hours. This efficiency is a result of Sberbank’s active participation in all Indian payment and interbank systems, ensuring that there are no restrictions on its operations. The use of roubles and rupees for transactions has proven to be effective, eliminating the need for third-party currencies for settlement.
While the issue of a rupee surplus held by Russian companies posed a challenge to bilateral trade in 2023, the growing Indian exports to Russia have helped alleviate this problem. Anatoly Popov emphasized the need for India to further increase its exports to Russia to achieve a more balanced trade relationship. With India being a self-sufficient economy capable of meeting various needs, Russian importers have found a reliable trading partner in the country.
Sberbank is also expanding its range of financial products, including hedging instruments like forwards and options, as well as rupee-denominated loans for Russian companies at lower rates than those available in Russia. The development of rupee-denominated “vostro” accounts has facilitated the operations of foreign banks in India, thanks to the cooperation of Indian regulators. Popov highlighted the importance of stock exchange trade in rupees, emphasizing that it would enhance transparency in financial transactions.
The growing trade relationship between Russia and India presents numerous opportunities for both countries to expand their economic cooperation. With smooth bilateral payments and a focus on addressing trade imbalances, the future looks promising for further strengthening trade ties between these two nations.