$100 bln Indo-Russia bilateral trade achievable by 2030, trade gap no worry: GTRI

New Delhi: India’s aim to clock bilateral trade of $100 billion with Russia by 2030 seems achievable, think tank Global Trade Research Initiative (GTRI) said Thursday, adding that increasing exports, making local currency trading workable and a free trade agreement with the Eurasian Economic Union will help boost trade. It said that India’s main concerns are containing the $57.1 billion trade deficit and finding an effective payment mechanism for transactions with Russia.

The current bilateral trade is at $65.7 billion in FY24 of which India’s exports to Russia were $4.3 billion with the share of crude oil and petroleum products in imports being 88%.

“India should not worry over the trade deficit, as it is getting crude petroleum oil at cheaper than market rates from Russia and it is also cutting India’s overall oil import bill,” GTRI said.

As per the report, export during FY21 and FY24 grew 59%, while imports surged about 8300%. Trade deficit rose to $57.2 billion now from $2.8 billion before the war in FY21.

It said that the import surge is solely due to India’s strategic procurement of crude oil from Russia influenced by favourable trade terms and Russia’s need to find new markets amidst Western sanctions.

India exports a diverse range of products to Russia including smartphones, shrimp, medicine, meat, tiles, coffee, parts of airplanes and helicopters, chemicals, computers, and fruits.“India has competitive advantage in these products and hence the potential to export more to Russia. India should prepare a product-level strategy to promote exports,”GTRI Founder Ajay Srivastava said.On local currency trade, the think tank said that trade cannot be settled in rupee due to limited international use of the Indian rupee and Russia’s reluctance to accumulate it beyond a limit.

The US has imposed sanctions on Russia, not allowing it to use SWIFT (Society for Worldwide Interbank Financial Telecommunication) pipeline for dollar transactions.

The key question for India is finding the best way to pay Russia the amount equal to $60 billion in trade deficit.

Noting that local currency trading would be the best solution for which India needs to establish a transparent and open currency exchange, GTRI said: “This exchange would provide clear, market-determined exchange rates between local currencies like Indian rupee and other currencies such as the Russian rouble, Malaysian ringgit, Thai baht, or Chinese yuan”.

Moreover, countries with currency surpluses, like Russia with its Indian rupee surplus from oil exports to India, could exchange their surplus for other currencies more efficiently in such a multi-currency exchange platform.

It also suggested making functional the International North-South Transport Corridor (INSTC) which is a 7,200-kilometer multi-modal route linking India with Iran, Azerbaijan, Russia, Central Asia, and Europe.

It would reduce transit time between India and western Russian ports from 45 to 25 days and cut freight costs by 30% compared to the Suez Canal route. INSTC, despite these advantages, has limited use due to underinvestment in infrastructure, according to GTRI.