NEW DELHI: Russia will utilize the rupee debt owed by India to finance its joint venture (JV) projects in aviation. These investments will have a lock-in period of five years.
The money (from the rupee-rouble trade days) is at present parked in a rupee account with the Reserve Bank of India (RBI), and can only be used by the Russian firms for buying goods from India. Russia estimates the rupee debt to be close to $1 billion (around Rs4,500 crore).
“The investments will be used by Russia to set up a titanium dioxide project in the country. Titanium dioxide is a lightmetal compound used in aircraft industry. We have the raw material, while Russia has the advanced technology to utilize it,” a government official said. Officials said Russia was also keen to invest in light multi-purpose aircraft sector.
Russia has been wanting to use the rupee debt for making investments in India. New Delhi was, however, keen on a lock-in period for allowing these investments. Officials said India is also keen to settle the debt as payments to several Indian exporters were held up in Russia in lieu of the country’s outstanding debt.
India has been repaying by transferring rupees to Russian Vnesheconombank account with RBI. The repayment period is till 2037, and is on a reducing scale. It will drop from the current level of Rs1,000 crore to Rs400 crore per year by 2010.