Engineering goods export to Russia hits record high as Ukraine war enters its third year

This comes as demand continues to remain weak in key markets including Europe and the US, where India’s exports in the same category slipped over 10 per cent last year.

Even as the Russian economy was slapped with crippling economic sanctions including being cut off from the Worldwide Interbank Financial Telecommunications (SWIFT) financial transaction processing system following the start of the Ukraine war, the output of Russian industries supplying goods to its military has surged several folds due to the extended war on its western border.

While India’s exports to Russia have surged, it has only been able to cater to a minuscule portion of the demand due to lack of a smooth payment mechanism. While India and Russia suspended talks to settle bilateral trade in rupees last year due to trade imbalance, Russia’s trade with China has skyrocketed surpassing a record $200 billion, with 95 per cent of the trade taking place in Russian ruble and China’s yuan.

“Requirements of engineering goods in Russia have been rising. Orders are coming in large numbers and the rupee trade is taking place. But not the way we wanted. The quantum continues to remain small as some banks are executing the order and some refraining from it. Exporters are bullish on demand from Russia and exports by the end of the financial year could jump by 100-120 per cent compared to FY22,” Arun Kumar Garodia, Chairman, Engineering Export Promotion Council of India told.

India’s export growth to Russia comes after the near collapse of Moscow’s trade with the West and Ukraine. Sanctions and counter-sanctions meant closer trade ties with China and India, the countries that are receiving bulk of the Russian oil that was redirected from the West.  Sourcing from India and China comes after Russia banned import of over 200 goods from the West, including telecoms equipment, medical, vehicle, agricultural, electrical equipment, and timber products. Prior to the war, Russia imported a range of industrial items including electrical, electronic equipment, machinery, nuclear reactors and boilers among other items from Ukraine worth nearly $4 billion.