Russia-India trade nearly doubled to $65 billion in 2023 amid western sanctions, says Sberbank

Russia's trade with India is booming and bilateral payments are proceeding smoothly without the glitches that have been hampering trade with other countries, Anatoly Popov, deputy CEO of Russia's largest lender, Sberbank, told Reuters.

Sberbank handles payments for up to 70% of all Russian exports to India. Russia's trade with India nearly doubled to $65 billion in 2023, with the country becoming a major importer of Russian oil after Western sanctions imposed in 2022 over a conflict in Ukraine.

"In 2022, there was a significant increase in the interest of Russian businesses in the Indian market because this market serves as an alternative," Popov told Reuters in an interview ahead of the Eastern Economic Forum, an economic conference targeting Russia's Asian partners.

Sberbank's branch in India has offices in Delhi and Mumbai, as well as an IT centre in Bangalore. The number of staff in its Indian offices increased by 150% this year, having said in April they wanted to hire 300 IT personnel for the hub in Bangalore.

Western Sanctions No Bar

Sberbank is under Western sanctions and therefore cannot make transactions in U.S. dollars and euros or use the SWIFT system for international transfers. However, Popov said the bank has not experienced any problems in India.

"Sberbank is a full participant in all Indian payment and interbank systems. There are no restrictions on its operations," Popov said. India has not joined any anti-Russian sanctions and maintains friendly relations with Russia, a fellow member of the BRICS group of emerging economies.

Sberbank said transactions in roubles and rupees are proceeding smoothly, with 90% of them taking only a few hours to complete. This is in stark contrast to other trading partners such as China.

Popov stressed that growing Indian exports to Russia have helped solve the problem of the rupee surplus held by Russian companies, which hampered bilateral trade in 2023, as rupees were used to pay for imports from India.

"The problem has been solved, there is no rupee surplus any longer," Popov said, emphasising that to achieve balanced trade, India still needs to increase its exports to Russia 10-fold. An Indian source told Reuters on Aug. 14 that the rupees surplus has dropped to a "few million dollars".

‘India Has Almost Everything’

He said that India, the world's fifth largest economy, had almost everything Russian importers were looking for.

"India is a self-sufficient, vast economy capable of meeting its own needs. Therefore, any goods that Russia previously imported can be purchased in India," Popov said.

Sberbank is also developing its offering of hedging instruments, which already includes forwards and options, as well as other products such as rupee-denominated loans for Russian companies at rates significantly lower than in Russia.

He thanked Indian regulators for the opportunity to operate through rupee-denominated "vostro" accounts, which domestic banks can hold on behalf of foreign banks in India, facilitating their operations.

Popov said that the current mechanism of converting roubles and rupees was functioning well and did not require any third-party currencies for settlement. However, he emphasized that stock exchange trade in rupees would increase transparency.