India’s love of discounted Russian oil is increasing its trade deficit with Moscow, and the much-heralded rupee trade strategy is suffering as a result, as per recent reports.
The local currency payment mechanism is useless because of the growing trade deficit between their exports and imports, according to sources with knowledge of the situation who asked to remain anonymous because the talks are private. No payment has been initiated, according to Russian banks, who do not want surplus rupee to amass.
According to figures from the trade ministry, New Delhi’s imports from Russia in the eight months leading up to November were about 16 times greater than its exports.
The much-lauded rupee trade policy is suffering because of India’s love of inexpensive Russian oil, which is growing its trade deficit with Moscow.
According to informed sources who requested anonymity because the negotiations are confidential, the widening trade disparity between their exports and imports renders the local currency payment system worthless. According to Russian banks, who do not want excess rupees to accumulate, no payment has been started.
The trade ministry’s statistics show that in the eight months prior to November, New Delhi’s imports from Russia were around 16 times bigger than its exports.
“Refiners prefer to pay in the United Arab Emirates dirham, which is pegged to the dollar”, a Bharat Petroleum Corp. Ltd. executive who did not want to be named said, adding that payment in rubles is difficult because there is no set exchange rate for the currency. Reliance Industries Ltd., the largest firm in India by market value, and BPCL are two Indian refiners who use dirhams to pay for some shipments of Russian petroleum to avoid Western sanctions.
The external affairs and trade ministries of India’s government did not immediately respond to requests for comment.
Overtaking Saudi Arabia and Iraq, Russia is now India’s top crude oil supplier. Every day in December, the South Asian country purchased 1.2 million barrels of crude oil from Russia.