Engineering goods exporters have highlighted payment problems with Russia using the rupee trade mechanism and have sought proper guidelines to ensure private sector banks and certain significant PSU banks, like Canara Bank, accept Russian payments and give Bank Realisation Certificates (BRC).

Russia’s Sberbank is charging higher exchange rate than the market leading to rise in transaction cost, EEPC India Chairman Arun Garodia pointed out in a review meeting called by Commerce & Industry Minister Piyush Goyal with representatives of various export promotion councils on Monday.

Flexible rules

“He also pointed out that UCO Bank was only dealing with customers who have accounts with them and hence proposed to make the rules flexible,” a release issued by EEPC stated.

After the RBI allowed international trade in rupee earlier this year, Russia and India are in the process of implementing it smoothly in order to ensure that the economic sanctions imposed on Russia by Western nations, because on its war with Ukraine, do not hinder Indo-Russia trade.

“There are about 12 or 13 small Russian banks which are not on the sanctioned list, and they are transferring the payments from the Russian side to the Indian exporters’ banks in US dollars,” Garodia pointed out. 

While public sector banks like Bank of India and Union Bank of India were crediting the payments to the exporters’ account and giving the BRC, private sector banks were not doing that and banks like Axis Bank were not even handling documents or giving packing credit, he noted.

Proper guidelines

EEPC proposed that proper guidelines should be issued by the government so that private sector banks and some PSU banks, like Canara Bank, are made to accept Russian payments and credit to exporters bank accounts and give BRC. 

Goyal asked officials to analyse export data on the basis of sectors, commodities and markets to find out areas of opportunity for Indian exports.

Export promotion

He encouraged export promotion bodies to give an active push to exports and maintain the momentum of healthy growth recorded in the previous year. 

India’s export growth has slowed down since July 2022 due to deceleration in global demand owing to continuation of the Russia-Ukraine war, rising global inflation and interest rates.

The government hopes to achieve exports of goods worth over $450 billion in 2022-23, compared to $421 billion in 2021-22.