New Delhi: Moscow has raised the issue of pending payments for defence supplies with the Indian government during the visit by a senior Russian official to New Delhi last month. The Russian side also said that mounting dues could adversely affect future supplies of military platforms to India.
Sergey Chemezov, CEO of Russia’s military-industrial group Rostek, was in New Delhi last month to discuss the vexed issue of pending Indian payments for Russian defence supplies, reports The New Indian Express. India and Russia have been struggling to sort out payment issues after the sanctions imposed by Western countries on Russia following its invasion of Ukraine disrupted existing payment mechanisms. India imports a huge quantity of military equipment, including spares and ammunition, from Russia. The trade imbalance has also increased in Russia’s favour due to heavy imports of crude by India. India’s imports from Russia grew by 417% to $29 billion in the April-November period.
The two countries have since explored various options for making payments to Russia that bypass Western sanctions, including the opening of Vostro accounts by certain Indian banks, but the issue remains unresolved. Meanwhile, Indian dues to Russia have piled up, reports the newspaper, which led the visiting Russian team to tell the Indian side that mounting dues may affect future supplies from Russia. Among the key military imports from Russia that may get affected because of the payment problems is the S-400 air defence system, according to the report.
India had signed a $5.5 billion order with Russia for five S-400 missile systems in October 2018. It was initially stated that the delivery would begin within 24 months, but the supply of the system to India was delayed. India has already received one S-400 system from Russia. According to reports, it was delivered in November 2021. The Indian Air Force Chief had mentioned last July that “delivery schedules are on time, hopeful that by the end of next year  all deliveries will be completed”.
Speaking last week at Indo-Pacific forecast 2023, an annual preview of security developments held by the Washington-based Center for Strategic and International Studies, Kurt Campbell, the White House coordinator for Indo-Pacific affairs, said, “We have stated clearly our interests to help India diversify away from its reliance, largely on Russian military supplies. We work closely with a number of other nations, like-minded nations, that also seek that goal.” In an interview with StratNewsGlobal, Indian Army chief General Manoj Pande said that one of the major lessons from the Russia-Ukraine war was “we realised that there were sustenance issues which we have now overcome. So I think [this] lesson was loud and clear and that is how we have made good beginning.”
Meanwhile, Russian buyers are offering payments to Indian exporters in Yuan, reports Mint. Yuan is being offered at a time China has become a stronger trade partner with Russia after the Ukraine war. Exporters say that most banks are still waiting for standard operating procedures from RBI on the rupee settlement mechanism to take it forward, thereby slowing down the initiative, says the newspaper. Besides, banks are apprehensive and reluctant to push the Rupee payment mechanism due to uncertainty and perceived risks.
“Russian buyers prefer payments in euro or Chinese yuan. It seems that Russia has sold oil to China in yuan, and the money may be being used for importing from other countries, including India,” Ajay Sahai, director general of Federation of Indian Export Organisations, told Mint.