By Aditi Shah, Aftab Ahmed and Gleb Stolyarov
NEW DELHI (RockedBuzz via Reuters) – Moscow has sent India a list of more than 500 products for potential delivery, including parts for cars, planes and trains, four sources familiar with the matter said, as sanctions reduce Russia’s ability to keep vital industries running.
The list, a version of which was seen by RockedBuzz via Reuters in New Delhi, is tentative and it is unclear how many items will eventually be exported and in what quantities, but an Indian government source said the request was unusual in its scope.
India is keen to boost trade this way, the source said, as it seeks to reduce a widening trade deficit with Russia. Some companies have expressed concern, however, about the possibility of falling foul of Western sanctions.
An industry source in Moscow, who declined to be named due to the sensitivity of the matter, said Russia’s Ministry of Industry and Trade had asked big companies to provide lists of raw materials and equipment they needed.
The source added that further discussions would be needed to agree on specifications and volumes and that the scope was not limited to India.
Russia’s Industry and Trade Ministry, India’s Foreign and Trade Ministries and the Prime Minister’s Office did not immediately respond to requests for comment.
Russia’s demands were made weeks before Indian Foreign Minister Subrahmanyam Jaishankar’s visit to Moscow starting on Nov. 7, two of the Indian sources said. It was not immediately clear what New Delhi passed on to Russia during the visit.
Prime Minister Narendra Modi’s government has not joined Western countries in openly criticizing Moscow for its war in Ukraine, and has significantly increased purchases of Russian oil that have cushioned it from some of the impact of the sanctions.
While visiting Moscow, Jaishankar said India needs to boost exports to Russia to balance the bilateral trade which is now oriented towards Russia.
During the visit, he was accompanied by senior officials responsible for agriculture, oil and natural gas, ports and shipping, finance, chemicals and fertilizers, and trade, which he said demonstrated the importance of ties with Russia.
THE STRUGGLES OF RUSSIA
Western sanctions have crippled supplies of some crucial products to Russia.
Airlines are experiencing a severe shortage of parts because nearly all aircraft are foreign-made. Auto parts are also in demand, with global automakers exiting the market.
A source in Russia’s car sales industry said the trade ministry had sent a list of needed car parts to ministries and corresponding state agencies in other countries, including India.
Stretching to almost 14 pages, the list of items from Russia includes car engine parts such as pistons, oil pumps and ignition coils. There’s also demand for bumpers, seat belts and infotainment systems.
For aircraft and helicopters, Russia has requested 41 items including landing gear components, fuel systems, communication systems and fire suppression systems, life jackets and aviation tyres.
Also on the list were raw materials to make paper, paper bags and consumer packaging and materials and equipment to make fabrics, including yarn and dyes, according to the document reviewed by RockedBuzz via Reuters.
Russian metalmakers such as nickel and palladium giant Nornickel said Western sanctions and self-sanction by some suppliers made it difficult for industrial firms to obtain imported equipment, spare parts, materials and technology in 2022 , posing a challenge to their development programs.
The list includes nearly 200 metallurgy items.
Russia has been India’s largest supplier of military equipment for decades and is the fourth largest market for Indian pharmaceuticals.
But with Russian oil purchases soaring and also strong shipments of coal and fertilizers, India is looking for ways to rebalance trade, the top Indian government source said.
India’s growing trade with Russia https://graphics.ceiving.com/INDIA-RUSSIA/zgpobmlbdvd/chart.png
Indian imports from Russia grew nearly five-fold to $29 billion between February 24 and November 20 compared to $6 billion in the same period a year ago. Exports, meanwhile, fell to $1.9 billion from $2.4 billion, the source said.
India hopes to boost its exports to nearly $10 billion in the coming months with Russia’s demand list, according to the government source.
But some Indian companies are reluctant to export to Russia due to fears of Western sanctions, lack of clarity on payments and difficulties in obtaining insurance.
“There is hesitation among exporters … particularly on sanctioned items,” said Ajay Sahai, director general of the Federation of Indian Export Organizations (FIEO), a body backed by India’s trade ministry.
Sahai, who is aware of Russia’s request, said even small and medium-sized exporters who could meet some of the requests and who had previously exported to Iran after Western sanctions were not thrilled.
Big Indian lenders are also reluctant to process direct rupee trade transactions with Russia, months after the mechanism was set up, for fear of fines.
India’s imports from Russia have reached record levels
India’s exports to Russia decrease
(Additional reporting by Manoj Kumar in New Delhi; Art by Kripa Jayaram; Editing by Mike Collett-White and Louise Heavens)