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Russian president Vladimir Putin-- AFP

While Russia has found a trusted trade partner in India in an increasingly tightening climate of sanctions from the western nations, it is trying to move beyond the crude oil trade by importing farm produce, vehicles and ancillaries ffrom India to overcome reducing supplies in its domestic market. Moscow has evinced interest in sourcing these items from India since a few vehicle manufacturers have stopped operations in that country following economic sanctions, a report in The Times of India says.

Russia launched a full-scale military offensive against Ukraine on February 24 last year to protest its joining NATO. Since then, there has been no indication of cessation of hostilities. While Ukraine has been devastated, Russia too has suffered a fair degree of economic impact due to sanctions from the west.

Demand for food

In view of the demand from Moscow, a 50-member delegation of the Federation of Indian Export Organisations (FIEO) has gone to Russia on a three-day tour to explore options to expand bilateral trade. FIEO director general and chief executive officer Ajay Sahai earlier told Hindustan Times that there was considerable demand in Russia for processed food, soya and animal feed that Indian exporters can take advantage of. With the demand for these items zooming following some western players exiting the country, Russia has turned to India for help.

Also on the discussion table is the possibility of rupee-rouble trade, a mechanism that was in vogue till the 1980s before the dissolution of the Soviet Union.

While the Russian government is trying to beef up supplies quickly, Indian exporters are seeking to re-establish the rupee-rouble trade that seeks to settle dues in rupees instead of dollars.

Exporters back rupee-rouble trade

Exporters think that rupee-rouble trade will help them save costs since they lose about 4% per transaction in the current system.

In fact, the war with Ukraine has resulted in India importing far higher crude from Russia than it used to earlier. In February India bought 16 lakh barrels of crude every day from Russia, a quantity that surpasses the cumulative supplies from Saudi Arabia and Iraq, two of India’s traditional sources