Cargo containers are stacked outside the Jawaharlal Nehru Port Trust (JNPT) container terminal in Mumbai, India, July 15, 2015. REUTERS/Shailesh Andrade

MUMBAI/NEW DELHI, May 11 (Reuters) – Russian importers are reaching out to small Indian businesses for fresh produce, auto parts, medical devices and other essential goods that are becoming scarce due to international sanctions, indicated people familiar with the subject in both countries. Russia and India said.

Private sector players in Russia have met potential suppliers in major Indian cities and are opening specialized bank accounts in the country for ruble-rupee transactions, with the blessing of both governments, the sources said.

As the conflict in Ukraine drags on and sanctions tighten around the Russian economy, the stakes have risen both for Russian companies needing overseas goods and for large global corporations want to avoid these companies for fear of breaking the penalty rules.

In India, one of the largest economies in the world to continue trading with Russia, it has shed light on small and medium-sized enterprises (SMEs) as a potential trade route which, although limited in size, could remain. under the sanctions radar.

“It is absolutely clear that large Indian conglomerates exposed to the West will not do business with Russian companies,” said a senior Indian foreign ministry official based in New Delhi.

“But SMEs can export and settle payments through banks that are not under Western sanctions.”

The official, who requested anonymity because he was not authorized to speak to the media, said representatives of Russian chambers of commerce were traveling to New Delhi, Mumbai and Bangalore to identify companies wishing to set up new subsidiaries or joint ventures to export goods to Russia. .

In particular, they are looking for durable consumer goods, spare parts for the transport sector, medical devices, construction materials for large infrastructure projects and frozen foods ahead of the winter season, the official said.

Among them was a Russian trader in Mumbai this week to meet exporters of vegetables and parts for the public transport sector.

“We are not facing any food shortages at the moment, but it is essential to ensure a stable supply chain in the next 60 days,” the trader said.

Three other senior government officials and a banking official based in New Delhi, Moscow and St. Petersburg said Russian companies were actively opening accounts in Commercial-Indo Bank LLC, a joint venture between two Indian banks headquartered in Moscow.

RUBLES TO RUPEES

These so-called Nostro accounts, used in Soviet times primarily to settle international transactions by converting national currency into a foreign currency, provided a mechanism for direct payment from rubles to rupees for trade between the two countries when tensions were high. strong between Washington and Moscow. .

Officials of Commercial-Indo Bank and its two parent banks, State Bank of India (SBI.NS) and Canara Bank (CNBK.NS), did not respond to questions from Reuters.

The Indian Embassy in Moscow and the Russian Ministry of Industry and Trade declined to comment. India’s Ministry of Commerce and Foreign Affairs has not commented.

A senior government official with extensive knowledge of the matter in New Delhi added that Russia was offering dedicated cargo vessels as well as insurance and reinsurance as no European bank would provide it, although Indian ministry sources of finance and foreign affairs said the terms were still under discussion.

New Delhi has not joined the widespread condemnation of Russia, its second-largest supplier of defense equipment and a valuable source of oil imports, as well as a potential export market. Read more

“But it is essential to ensure that the West does not get angry with India’s increased economic involvement because New Delhi cannot jeopardize its ties with the West,” said Nandan Unnikrishnan, head of Eurasian Studies at the Observer Research Foundation, a private sector association. thinking group.

India’s total merchandise trade with Russia is relatively modest, at around $8.1 billion in 2021, or around 1.2% of India’s total trade, although two Indian officials have estimated that the Exports to Russia would increase by more than $500 million over the next three months as trade channels open up to small Indian businesses.

An Indian exporter from Calcutta, who requested anonymity due to the sensitivity of the matter, said after the outbreak of war many traders stopped dealing with Russian buyers, fearing payment defaults , but their distrust was fading.

“People have started selling goods to Russia again, and in recent weeks Russia has increased its purchases of tea and coffee.”

Additional reporting by Rajendra Jadhav, Nupur Anand in Mumbai; Editing by Edmund Klamann

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