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.
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.
According to insiders, while Russian banks would create accounts in Indian banks to deposit roubles, Indian banks will have to open accounts in Russia to deposit rupees. India has always been a textile and apparel exporter, while Russia buys them to suit its regular clothing demands. According to Fibre2Fashion’s market analysis tool TexPro, India’s garment export to Russia was only 0.46 percent of India’s overall apparel export of $14.472 billion last year, compared to 30.44 percent to the United States and 13.27 percent to the United Arab Emirates.
Russia, on the other hand, is more reliant on China and Bangladesh for garment imports. It imported 32.60 percent and 14.62 percent of clothes from these two countries, respectively, out of a total import of $7.952 billion in 2021. India’s proportion of total garment imports was only 1.98 percent.
According to TexPro data, India’s garment exports to Russia have dropped dramatically as a result of COVID-19. Exports fell to $57.674 million in 2020, down from $75.326 million in 2019. In 2021, India shipped $66.394 million in clothes, whereas exports were $76.571 million in 2018 and $84.532 million in 2017.