While India’s exports to Russia stood at only USD 2.24 billion in April-August this fiscal, imports soared to USD 27.35 billion during the period. The total amount of the trade deficit is USD 25.11 billion.
S Jaishankar, the minister of external affairs, demanded “urgent” action on Monday to address the growing trade deficit between Russia and India.
During April through August of this fiscal year, India’s imports reached USD 27.35 billion, while its exports to Russia totalled just USD 2.24 billion. The total amount of the trade deficit is USD 25.11 billion.
Crude imports are the primary cause of the large trade deficit.
Since Russian oil was on sale after some European countries refused to buy from Moscow due to its invasion of Ukraine in February 2022, Russia has become India’s largest supplier of crude oil, which is transformed into fuels like petrol and diesel in refineries.
Speaking to the India-Russia Business Forum in this city, S. Jaishankar also advocated for the elimination of regulatory and non-tariff trade barriers in order to enhance the trade balance with Russia.
“The balance of trade needs urgent redressal since it is so one-sided. For this to occur, non-tariff barriers and regulatory obstacles must be promptly removed,” he stated.
He added that the target of reaching USD 100 billion is “more than realistic” given the current bilateral trade of USD 66 billion.
Additionally, he promoted the use of national currencies for trade settlement, particularly in the “current circumstances.”
“At the moment, Special Rupee Vostro Accounts are a useful tool. But even in the short term, the solution is a better trade balance with national currency settlements,” he continued.
S. Jaishankar claimed that a “strategic direction” was given by the meetings between President Vladimir Putin and Prime Minister Narendra Modi during the Annual Summit in Moscow and Kazan last month.
“A collaboration between Russia, a major supplier of natural resources and a major leader in technology, and India, which has an 8% growth rate for several decades to come, will benefit both countries and the world,” he stated.
S. Jaishankar stated that the three connectivity projects between two economies—the Northern Maritime Route, the Chennai-Vladivostok Corridor, and the International North-South Transport Corridor—need ongoing attention.
“It is natural that there would be concerns, such as banking and payment-related issues, logistical challenges like shipping, insurance, and reinsurance, as well as market access. It goes without saying that we must come up with solutions that satisfy the comfort level of those who are actually engaged in trade,” he stated.
India will continue to be a significant player in global markets for energy-related products like coal, uranium, gas, and oil.
This also holds true for the demand for different types of fertilisers. Building a win-win agreement will enable us to both deal with the turbulence and unpredictability of our times’, the minister stated.
According to him, India and Russia can collaborate to alleviate “demographic unevenness” or leverage the global workplace model. However, this will necessitate a targeted effort that “customises human resources” for the Russian market.
Non-economic areas, like using films and education to foster a wider social and economic bond between the two nations, are also crucial, he added.
Several businessmen, including Anish Shah of Mahindra, attended the event, which was sponsored by the Indian industry lobby group Ficci and included Russian Deputy Prime Minister Denis Manturov.