Once the framework is established, RBI and Central Bank of Russia will announce customised common reference exchange rate on daily basis, on which importers and exporters can negotiate pricing of the products and payment transactions. This will promote bilateral trade in local currencies bypassing the US dollar.
Indian textiles and apparel export to Russia, which are currently negligible, are likely to see multi-fold rise once both the countries set a mechanism to accept payments in local currency. According to information, the Reserve Bank of India, the country’s central bank, is working on building a reference exchange rate framework between rupee and rouble.
While Russian banks will open accounts in Indian banks to deposit rouble, Indian banks will have to open account in Russia to deposit rupee, sources said.
Traditionally, India is exporter of textiles and apparel, while Russia imports them to meet its regular clothing needs.
According to Fibre2Fashion’s market insight tool TexPro, India’s apparel export to Russia was mere 0.46 per cent of India’s total apparel export of $14.472 billion during last year compared to 30.44 per cent to the US and 13.27 per cent to the UAE.
On the other hand, Russia is more dependent on China and Bangladesh for apparel import. It had imported 32.60 per cent and 14.62 per cent apparel respectively from these two countries out of total import of $7.952 billion during 2021. India’s share was just 1.98 per cent in its total apparel import.
As per TexPro data, India’s apparel export to Russia had noticed steep fall due to COVID-19. The export declined to $57.674 million in 2020 from $75.326 million of 2019. India had shipped garments worth $66.394 million in 2021 while the export was recorded at $76.571 million in 2018 and $84.532 million in 2017.
Fibre2Fashion News Desk (KUL)
