Russia seeks to buy more from India to beat West’s sanctions, use surplus rupee balance

Russia’s President Vladimir Putin and India’s Prime Minister Narendra Modi
| Photo Credit:
ALEXANDER KAZAKOV

Russia has sought to significantly boost Indian imports and pursue joint ventures to deploy the growing rupee balance in its vostro accounts—a direct result of “over 90 per cent” of bilateral trade now being settled in local currencies following Western sanctions, sources have said.

“Following Russian President Vladimir Putin’s visit to India with his business delegation, a lot of Russian companies are in touch with Indian companies seeking to buy more from India. Many of them are planning to visit India in January to take their plans forward,” said Ajay Sahai from Federation of Indian Export Organisations (FIEO).

Vostro accounts are accounts held by a domestic bank on behalf of a foreign bank in which trading partners can hold rupee-denominated balances emerging from trade transactions. While the RBI has not officially put out data on the rupee balance in Russian vostro accounts, it would run into billions of dollars as Putin acknowledged during his India visit that over 90 per cent of the bilateral trade was now taking place in local currencies.

“There is big interest in items such as food and agriculture, home textiles, footwear, engineering goods, IT and ITES and logistics. Fieo, too, would mount two delegations to Russia over the next couple of months,” Sahai added.

The scope for growth of Indian exports, which was just $4.9 billion in FY25, is huge, as it comprised roughly about 2 per cent of the country’s total imports. In sharp contrast, India’s imports from Russia were at $ 63.8 billion, comprising mostly crude, leading to a deficit of about $59 billion. 

“Although India’s oil imports from Russia is expected to decline due to US sanctions on Russian oil companies, purchases from non-sanctioned companies would continue and both sides are determined to meet the $100 billion bilateral trade target of 2030”, a government source said.

“We are hopeful of a sharp rise in exports of engineering products to Russia as there is a demand for all kinds of items. As the Russian government is now paying for our exports with Indian rupee collecting in their vostro accounts (because of payments for Russian oil by India)l, and there would be a big surplus given India’s trade deficit with Russia, there is a lot of optimism amongst exporters about the future,” said Pankaj Chadha, Chairman Engineering Export Promotion Council.

While some big Indian companies may hesitate in doing more business with Russia because of their exposure to the Western markets and fears of sanctions, the MSMEs are very keen to explore the market, Chadha explained. Western countries, including the US and the EU, have imposed various economic and banking sanctions on Russia on account of its long-drawn war with Ukraine.

“The small and medium exporters need to be taken to Russia to help them secure orders. The government’s Market Access Initiative scheme should be used to help small exporters in tapping the Russian market,” Chadha said.

Commerce Secretary Rajesh Agrawal said that during Putin’s recent India visit the message was positive both from the Russian industry and the regulators that pathways need to be cleared for more exports from India to Russia.

“Some of the improvements in terms of lowering SPS barriers, for instance in terms of listing of marine units, has already started happening over the last three months indicating a positive nudge from their system also towards increasing imports from India,” Agrawal said.

Indian companies must also look at items for which there is a big demand in Russia but exports from India are low, such as automobiles, auto components and pharmaceuticals. 

“If you look at some of the statements of their leaders, I think they referred to these areas. There has been enough of signalling this time. What needs tobe done at the government level is being done. Facilitators are facilitating the path ways. Now business leaders also try to see what opportunities can be actualised. Whatever challenges that will come in the way we will see that those are resolved,” Agrawal said.

Published on December 16, 2025