The industry is hopeful of commencing full-fledged rupee trade with Russia by the end of this month with UCO Bank putting in place the necessary guidelines and the Central government likely to soon come out with a notification allowing exporters to enjoy all existing export benefits.

According to Ajay Sahai, Director-General and CEO, Federation of Indian Export Organisations (FIEO), UCO Bank is working on the guidelines for putting in place the rupee trade mechanism and the trade is likely to resume in the next 15 days.

Rupee account

With a view to provide alternatives to ensure smooth payment mechanism for trade to circumvent the impact of western and American sanctions on Russia, the Indian government has allowed UCO Bank to open a rupee account with Russia’s Gazprombank.

“So far it is not clear whether exports under rupee trade mechanism will receive the benefits of RoDTEP and duty drawback which are usually available for exports in foreign currency. But from what we hear, the government is soon likely to make an announcement clarifying this. There is a precedent in case of Iran (where we have the rupee-rial trade mechanism),” Sahai told businessline on the sidelines of a press conference on Wednesday.

In order to promote exports, the Reserve Bank of India issued a circular on July 11, allowing trade settlements between India and other countries in rupee with immediate effect. Indian importers undertaking business through this mechanism will have to make payments in rupee , which would be credited into the special vostro account of the correspondent bank of the partner country, against the invoices for trade. A vostro account is an account which a foreign bank opens with an Indian bank in domestic currency that is rupee.

Apart from Russia, UAE and Saudi Arabia have also expressed interest to explore rupee trade mechanism with India, he said.

West Bengal to focus on exports

According to Sahai, West Bengal’s share in the country’s total exports is currently about three per cent and the state should endeavour to increase it to five per cent by 2030. Since India is aiming for $1000 billion merchandise exports, West Bengal should target $50 billion export by 2030.

Tea and jute are few of the traditional export oriented sectors of the State. Identification of niche products in the tea and jute sector which has good export potential can help existing exporters or new entrepreneurs to increase their exports.