70% of exporters’ payments stuck in Russia have come in
2 min read . Updated: 05 May 2022, 05:58 AM IST
Premium- Exporters had claimed that about $500 mn in payments were stuck after the war began in Feb
As much as 70–80% of the payments for goods that were shipped to Russia before the Ukraine war have been coming in, a government official privy to the matter told Mint, comforting exporters.
Exporters had claimed that about $500 million in payments were stuck after the war began in February.
Stuck dues had become a pain point for Indian exporters, especially after Russia was cut off from the SWIFT payment gateway. A sharp jump in the rouble complicated matters. Some exporters did start getting their payments a few weeks into the war, but large payments remained stuck.
In FY21 India’s exports to Russia stood at $2.6 billion, while imports were $5.5 billion. India had shipped phrama products worth $469 million and electrical machinery worthy $301 million to Russia.
Earlier commerce secretary BVR Subrahmanyam had said that the rupee-ruble trade mechanism was discussed to help exporters recover dues. The Reserve Bank of India had clarified that though there was no platform to facilitate a rupee-ruble trade, this was being discussed with all the stakeholders.
“The department of financial services (DFS) has told us that 70% to 80% of the stuck payments are back.This is only for commodities that had gone before the war broke. After the war, not many commodities were exported as shipping lines were not available," a commerce ministry official said.
Exporters concurred that payments have started arriving, even as trade with Russia has come to a standstill. “The payment problems with Russia were never related to defaults. The payment mechanism was an issue. About two-thirds of the payments were received till around 10 days ago and the numbers have surged to 70% now," said Ajay Sahai, director-general of the Federation of Indian Export Organisations, the country’s apex body of exporters.
Mint had earlier reported that Indian exporters had received close to $100 million out of the payments of $400-500 million that were stuck at the beginning of March.
“There is a lack of clarity regarding export of products to Russia following the sanctions by western countries," said Sahai. Russian banks have said that exporter can export any product and the payment will be credited to their account, according to exporters.
The sanctions by western countries cover everything except food, pharma and medical equipment, and the energy sector.
“Unfortunately, Indian banks are not clear whether they will issue electronic bank realisation certificates, for sectors other than the exempted ones as there is no communication from the government to the bank on how to deal with exports of items that are not exempted. There have been cases where Indian banks have refused to issue eBRC in respect of transactions under sanctions," Sahai said.
Recently, Russia’s largest retail company X5 group reached out to Indian suppliers to make up for shortages in food, textiles, and beauty products. However, exporters are unsure if they will be allowed to sell textiles and beauty products to Russia.
Queries mailed to the department of commerce and the Russian Embassy remained unanswered till press time.
A number of exporters told Mint that those shipping goods to Russia were not being uniformly given insurance cover, which is provided by the state-owned Export Credit Guarantee Corporation, compounding their problems.
