India-Russia talks to push trade in local currencies

NEW DELHI: India and Russia are currently in discussions to conduct trade in local currencies and reduce non-tariff barriers imposed by Moscow, aiming to boost bilateral trade, Commerce Secretary Sunil Barthwal announced on Wednesday.

Barthwal addressed these issues during meetings last month with Russian Minister for Economic Development Maxim Reshetnikov, Russia’s Deputy Minister of Industry and Trade Alexey Gruzdev, and Sergei Dankvert, Head of the Federal Service for Veterinary and Phytosanitary Supervision (FSVPS) of the Russian Federation.

“We discussed various measures to enhance trade between India and Russia, including the facilitation of rupee-rouble trade and addressing the impact of non-tariff measures on our trade, with a focus on reducing these barriers,” Barthwal told reporters.

He noted that Russia has begun taking steps to lower these barriers, which have affected Indian export sectors such as meat and pharmaceuticals.

Trade diversification

Barthwal also mentioned discussions on diversifying trade beyond petroleum products, expressing optimism about significant growth in non-petroleum trade volumes.

India and Russia have long shared strong bilateral ties, underpinned by cooperation in various sectors, including defence, energy, and space.

However, economic relations have faced challenges, particularly due to global geopolitical shifts, sanctions against Russia, and the impact of the COVID-19 pandemic.

In recent years, both countries have been exploring ways to bolster trade and investment. With Western sanctions on Russia in response to its actions in Ukraine, Russia has been seeking to strengthen economic ties with non-Western partners, including India.

For India, expanding trade with Russia is part of its broader strategy to diversify its trade relationships and reduce dependence on traditional markets.

Rupee-rouble mechanism

The ongoing discussions around local currency trade, particularly the rupee-rouble mechanism, reflect efforts to bypass the challenges posed by sanctions and the volatility of global currencies.

By reducing non-tariff barriers, both nations aim to facilitate smoother trade flows, particularly in sectors like agriculture, pharmaceuticals, and engineering goods, which have been impacted by stringent regulatory and phytosanitary standards.

These discussions also align with India’s broader goals of increasing exports and improving its trade balance with key partners.

As both countries look to expand their economic engagement, these negotiations could pave the way for a more robust and diversified trade partnership.