India’s Potential to Boost Exports to Russia: The Need for a Modern Rupee-Rouble Settlement System Explained
India is poised to significantly boost its merchandise exports to Russia, potentially increasing from $5 billion to $35 billion by 2030, according to Ajay Srivastava, founder of the Global Trade and Research Initiative (GTRI). This optimistic projection comes as President Vladimir Putin visits New Delhi, coinciding with Russia’s ambition to elevate bilateral trade to $100 billion by the decade’s end. Despite total trade nearing $70 billion, India’s exports remain stagnant, primarily due to a heavy reliance on crude oil imports, which have created a substantial trade deficit.
Current Trade Dynamics
India’s trade relationship with Russia has become increasingly lopsided, with exports struggling to keep pace with soaring imports. In the fiscal year 2025, India exported goods worth $4.9 billion to Russia while importing a staggering $63.8 billion, resulting in a trade deficit of $58.9 billion. Crude oil imports alone accounted for $50.3 billion, highlighting the imbalance in the trade relationship. The GTRI report indicates that while total trade is on the rise, India’s exports to Russia have not seen a corresponding increase, remaining below $5 billion. This situation underscores the need for India to diversify its export portfolio and reduce its dependency on oil.
Identifying Opportunities for Growth
The GTRI has identified several sectors where India could enhance its market share in Russia, particularly in food, pharmaceuticals, textiles, and machinery. Despite being a major global exporter in these categories, India’s presence in the Russian market is minimal, with a market share of less than 5%. In 2024, Russia imported $202.6 billion worth of goods, but Indian exports accounted for only $4.84 billion, or 2.4% of the total. The report highlights significant gaps in food and agriculture, where India could capitalize on its strengths. For instance, while Russia imported $4.34 billion worth of fruits and nuts, India’s exports in this category were under $250 million. Similar disparities exist in processed foods, textiles, and pharmaceuticals, indicating substantial untapped potential for Indian exporters.
Challenges Hindering Exports
One of the primary obstacles facing Indian exporters is the lack of a reliable payment system. With Russian banks cut off from the SWIFT network, transactions have become cumbersome and unpredictable, deterring many exporters from entering the market. The GTRI emphasizes that without a modern rupee-rouble settlement system, India may continue to be a significant oil supplier to Russia but will struggle to establish a robust export market. The report suggests that a return to a fixed rupee-rouble mechanism, similar to what existed during the Soviet era, could mitigate currency risks and enhance trade predictability.
Strategies for Future Success
To achieve the ambitious goal of increasing exports to $35 billion by 2030, India must adopt a multi-faceted approach. This includes establishing a reliable local-currency settlement system, improving logistics and certification frameworks, and promoting targeted trade initiatives in key sectors such as food, pharmaceuticals, and textiles. Additionally, institutional support is crucial for exporters navigating compliance and distribution challenges. If these structural reforms are implemented, the GTRI believes India can significantly narrow its trade deficit and expand its economic influence in the Eurasian market.
Observer Voice is the one stop site for National, International news, Sports, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.
Follow Us on Twitter, Instagram, Facebook, & LinkedIn
