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Indian textile and garment exports to Russia, which are currently minimal, are expected to skyrocket once both countries establish a mechanism to accept payments in local currency. According to reports, the country’s central bank, the Reserve Bank of India, is working on developing a reference exchange rate mechanism between the rupee and the rouble.

Once the framework is in place, the RBI and the Central Bank of Russia would publish a daily tailored common reference exchange rate on which importers and exporters can negotiate product price and payment transactions. This will encourage bilateral trading in local currencies rather than the US currency. While Russian banks open accounts with Indian banks to deposit roubles, Indian banks must create accounts in Russia to deposit roubles.

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.