Exporters receive payment dues in euros from Russia

Dilasha Seth

& Ravi Dutt Mishra

BENGALURU/NEW DELHI: Indian exporters to Russia have started receiving stuck payments in euros through banks that are not under Western sanctions, although Moscow and New Delhi are still to prepare an alternative payments mechanism.

Industry estimates suggest that Indian exporters have received nearly $100 million from Russian buyers.

At the beginning of March, nearly $400-500 million worth of export payments to Russia were stuck, according to industry estimates. However, exporters told Mint that there had been no case of payment defaults, with Russian buyers trying to make payments through alternative routes and keen to buy more. However, despite high demand from Russia, the lack of insurance cover and blocked routes are preventing consignments from getting shipped.

“Payments have started moving from Russia in euros through smaller banks. We are told that around $100 million worth of payments has already come in. There are no default cases by Russian importers, and they are willing to buy more from India,” said Ajay Sahai, chief executive officer and director-general, Federation of Indian Export Organisations.

While the US imposed fresh sanctions on more banks, covering the state-owned Sberbank and private lender Alfa-Bank, the latter reportedly said it will continue transaction in rubles, euros and other currencies, while halting those in dollars.

“There are smaller Russian banks that are not on the sanctions list. So some of the dues are coming via these banks, but there is a lot of uncertainty on this front,” said Anshuman Kanoria, chairman of the Indian Tea Exporters Association. He added that consignments to Russia remain stuck due to the unavailability of shipping lines. “Shipping giant Maersk, for instance, has said they will halt cargo bookings to and from Russia, and this has slowed shipments on the route,” he added.

Queries emailed to the spokespeople for the department of commerce and Russian Embassy remained unanswered till press time.

Mahesh Desai, chairman of the Engineering Exports Promotion Council (EEPC), confirmed that payments were being made in euros by Russian importers. “There is a ban on nine big Russian banks. There is no ban on smaller banks. So Russian buyers are making small payments for goods that they have received in euros,” Desai said. He added that while Russian buyers were willing to buy and pay, the problem was the consignments are yet to be shipped due to the lack of insurance cover.

“Russian buyers want to buy goods from India. There are a huge amount of goods lying ready for shipments from India. But, due to the lack of ECGC cover, no bank is willing to give concessional finance to exporters. Besides, while smaller payments are coming in, larger payments are still a question mark,” Desai said. In February, Export Credit Guarantee Corp of India (ECGC) modified the cover category shipments to Moscow from ‘open cover’ to ‘restricted cover’ category and rose premiums.

AP At the beginning of March, nearly $400-500 million worth of export payments to Russia were stuck.