Ukraine is approaching 70-80% of payments for goods shipped to Russia before the war, a government official close to the matter told Mint, giving rest to exporters.
The exporters had claimed that around $500 million in payments were pending since the war broke out in February.
The stuck dues had become a problem for Indian exporters, especially after the SWIFT payment gateway in Russia got disconnected. A sharp jump in the ruble complicated matters. Some exporters started receiving their payments only a few weeks after the war, but large payments remained stuck.
India’s exports to Russia stood at $2.6 billion in FY21, while imports stood at $5.5 billion. India sent pharma products worth $469 million and electrical machinery worth $301 million to Russia.
Earlier, Commerce Secretary BVR Subrahmanyam had said that the rupee-ruble trading mechanism was discussed to help exporters recover dues. The Reserve Bank of India had clarified that though there was no forum to facilitate rupee-ruble trade, it was being discussed with all stakeholders.
“The Department of Financial Services (DFS) has told us that 70% to 80% of stuck payments are returned. This is only for items that went away before the war broke out. After the war, a lot of goods were exported. was not done as shipping lines were not available,” said a commerce ministry official.
The exporters agreed that the payments have started coming, even as trade with Russia has come to a standstill. “Payment problems with Russia were never related to defaults. Payment mechanism was an issue. About two-thirds of payments were received till about 10 days back and now the number has increased to 70%,” said the Federation of Indian Export Organizations Ajay Sahai, director general of the country’s apex body of exporters, said.
Mint had earlier reported that Indian exporters had received around $100 million out of $400-500 million payments that were stuck in early March.
“There is a lack of clarity about exports of products to Russia after sanctions by Western countries,” Sahai said. Russian banks have said that exporters can export any product and payment will be credited to their account, according to the exporters.
Sanctions by Western countries include everything except food, pharma and medical equipment and the energy sector.
“Unfortunately, Indian banks are not clear whether they will issue electronic bank realization certificates for sectors other than the exempted areas, as there is no communication from the government to the bank on how to deal with exports of items that are not exempt. . There have been cases where Indian banks have refused to issue EBRCs in respect of transactions under sanctions,” Sahai said.
Recently, Russia’s largest retail company X5 Group reached out to Indian suppliers to meet the shortage of food, clothing and beauty products. However, exporters are unsure whether they will be allowed to sell textile and beauty products to Russia.
Questions sent to the Commerce Department and the Russian Embassy remained unanswered as of press time.
Several exporters told Mint that consignees to Russia were not being provided with the same insurance cover as is provided by the state-owned Export Credit Guarantee Corporation, adding to their problems.