India-Russia trade hit by over cautiousness of Indian banks, says Russian envoy

India-Russia trade relations have been affected by excessive caution among Indian banks, which are wary of potential exposure to U.S. secondary sanctions, Russian Ambassador Denis Alipov said. They are worried about potential penalties from the United States for dealing with Russia. Russian Ambassador Denis Alipov spoke about this issue during a media briefing, highlighting the need for countries in the BRICS group—Brazil, Russia, India, China, and South Africa—to have more influence in global financial matters.

Key Points

Trade Goals:

• In July, Indian Prime Minister Narendra Modi and Russian President Vladimir Putin set a goal for India and Russia to reach $100 billion in trade by 2030.
• So far, they have managed to achieve $30 billion in trade, ahead of the target date of 2025. However, there are concerns that India’s exports to Russia are only about $5 billion out of a total of $65.7 billion in trade for the financial year 2023-24.

Banking Concerns:

• The Russian ambassador pointed out that the main issue affecting trade is the caution of Indian banks. They are hesitant to engage with Russia because they fear the consequences of U.S. sanctions.
• Alipov explained that U.S. authorities are very attentive to transactions between Indian banks and Russian banks. They often threaten to impose sanctions if they find any transactions they disapprove of.

Call for Equal Representation:

• The ambassador stressed that countries in the BRICS group should have equal representation in global financial discussions. He argued that India’s opinions should be valued just as much as those from the U.S. or Russia.
• He raised a hypothetical question: If the U.S. were to ask India to cut ties with another country, like Bangladesh, what would India do? This question highlights the pressure that India might feel from the U.S.

Positive Outlook for India-Russia Relations:

• Despite the challenges, Alipov expressed optimism about the future of India-Russia relations. He mentioned that 2024 has been a productive year for their partnership, especially after the Modi-Putin summit.
• Both countries are working on a free trade agreement (FTA) between India and the Eurasian Economic Union, which they believe will significantly boost trade.

Future Cooperation:

• Russia is also focused on enhancing cooperation in various sectors, including nuclear energy. They are building six reactors at the Kudankulam nuclear power plant in India, with plans for further collaboration in the nuclear sector.
• They are preparing for a meeting in New Delhi on November 12 to discuss trade, economic, scientific, technological, and cultural cooperation.

Response to Criticism:

• Alipov dismissed comments from Ukrainian President Volodymyr Zelensky, who claimed that the BRICS Summit was a failure. He argued that BRICS serves as an important platform for the Global South and is not against Western countries but seeks to provide a balanced view in global affairs.

Conclusion

In summary, the trade between India and Russia has been hindered by Indian banks’ fears of U.S. sanctions, but there is a shared goal to increase trade significantly in the coming years. Both countries are optimistic about future cooperation, especially in trade agreements and energy projects. The ambassador’s comments also highlight the importance of equal representation for BRICS nations in international discussions.