Russia-India Trade Boom

By Elena Fabrichnaya and Gleb Bryanski

MOSCOW (Reuters) – Russia’s trade with India is booming, with bilateral payments proceeding smoothly, according to Anatoly Popov, deputy CEO of Sberbank, Russia’s largest lender.

Sberbank handles payments for up to 70% of all Russian exports to India. In 2023, trade volume between the two nations nearly doubled to $65 billion, especially as India became a major importer of Russian oil following Western sanctions imposed on Moscow in 2022 amid the Ukraine conflict.

“In 2022, there was a significant increase in the interest of Russian businesses in the Indian market because this market serves as an alternative,” Popov stated before the upcoming Eastern Economic Forum, an economic conference targeting Russia’s Asian partners.

Sberbank has started opening accounts in rupees for Russian clients. Popov noted that the rupee might serve not only as a payment method but also as a savings vehicle.

Sberbank’s branch in India boasts offices in Delhi and Mumbai, with an IT center in Bangalore. The staff in these offices grew by 150% this year, indicating plans for extensive hiring, including 300 IT personnel in Bangalore.

Despite being under Western sanctions, restricting transactions in U.S. dollars and euros or use of the SWIFT system, Sberbank reported no transaction issues in India. Popov assured, “Sberbank is a full participant in all Indian payment and interbank systems. There are no restrictions on its operations.” India has not participated in anti-Russian sanctions, maintaining friendly relations as part of the BRICS group.

Smooth Transactions

Sberbank reported smooth transactions in roubles and rupees, with 90% of them completed within a few hours. This efficiency starkly contrasts with trading operations with other partners like China.

According to Popov, the increase in Indian exports to Russia has resolved the previously encountered surplus of rupees held by Russian companies that obstructed trade in 2023. He highlighted that to achieve balanced trade, India needs to increase its exports to Russia tenfold, with reports indicating that the rupee surplus has reduced to a few million dollars.

As the world’s fifth-largest economy, India can provide almost everything Russian importers require. Popov emphasized, “India is a self-sufficient, vast economy capable of meeting its own needs. Therefore, any goods that Russia previously imported can be purchased in India.”

Sberbank is enhancing its range of hedging instruments, including forwards, options, and rupee-denominated loans for Russian companies at lower rates than in Russia. He thanked Indian regulators for facilitating operations through rupee-denominated ‘vostro’ accounts, which allow domestic banks to hold funds for foreign banks in India.

Popov concluded that the current exchange mechanism for roubles and rupees is functioning effectively without the need for third-party currencies, predicting an increase in stock exchange trades in rupees would further enhance transparency.