Exclusive – India asks sanctions-hit Russia for parts for key sectors

The list, a version of which was seen by Reuters in New Delhi, is preliminary and it is unclear how many of the items will ultimately be exported and in what quantity, but an Indian government source said the request was unusual in scope.

India wants to increase trade in this way, the source said, as it tries to reduce its widening trade deficit with Russia. However, some companies have expressed concern about the possible violation of Western sanctions.

An industry source in Moscow, who declined to be named because of the sensitivity of the issue, said the Russian Industry and Trade Ministry has asked major companies to provide lists of raw materials and equipment they need.

The source added that further talks are needed to agree on specifications and quantities and that the rapprochement is not limited to India.

The Russian Industry and Trade Ministry and the Indian Foreign and Trade Ministries and the Prime Minister’s Office did not immediately respond to requests for comment.

The Russian requests were made weeks before Indian Foreign Minister Subrahmanyam Jaishankar’s visit to Moscow, which begins on November 7, two of the Indian sources said. It was not immediately clear what New Delhi had conveyed during the visit to Russia.

Prime Minister Narendra Modi’s government has not joined Western countries in openly criticizing Moscow over the war in Ukraine and has greatly increased its purchases of Russian oil, helping to cushion some of the effects of the sanctions.

During the visit to Moscow, Jaishankar said that India should increase exports to Russia to balance bilateral trade, which is now tilted towards Russia.

He was accompanied on the visit by senior officials responsible for agriculture, oil and natural gas, ports and shipping, finance, chemicals and fertilizers and trade – which he says shows the importance of ties with Russia.

THE STRUGGLE OF RUSSIA

Western sanctions have paralyzed the supply of a number of crucial products in Russia.

Airlines face an acute shortage of parts because almost all aircraft are foreign-made. There is also a demand for car parts as car manufacturers from all over the world have left the market.

A source in the Russian auto sales industry said the Commerce Ministry has sent a list of required auto parts to corresponding ministries and government agencies in other countries, including India.

The list of articles from Russia, which spans nearly 14 pages, includes automotive engine components such as pistons, oil pumps and ignition coils. Bumpers, seat belts and infotainment systems are also in demand.

For aircraft and helicopters, Russia requested 41 items, including components for landing gear, fuel systems, communication and firefighting systems, life jackets and aircraft tires.

Raw materials for the production of paper, paper bags and consumer packaging, and materials and equipment for the production of textiles, including yarn and dyes, were also on the list, according to the document reviewed by Reuters.

Russian metals producers such as nickel and palladium giant Nornickel have said Western sanctions and self-sanctions by some suppliers have made it difficult for industrial companies to source imported equipment, spare parts, materials and technologies by 2022, posing a challenge to their development programs. .

The list contains almost 200 metallurgical objects.

Russia has been India’s largest supplier of military equipment for decades and is the fourth largest market for Indian pharmaceuticals.

But as Russian oil purchases increase and coal and fertilizer shipments also boom, India is looking for ways to restore trade, the first Indian government source said.

India’s growing trade with Russia

Indian imports from Russia nearly quintupled to $29 billion between February 24 and November 20, compared to $6 billion in the same period a year ago. Exports, on the other hand, fell from $2.4 billion to $1.9 billion, the source said.

India hopes to increase its exports to nearly $10 billion in the coming months with the list of Russian requests, the government source said.

But some Indian companies are hesitant to export to Russia for fear of Western sanctions, lack of clarity about payments and problems with insurance.

“There is hesitancy among exporters, especially for sanctioned products,” said Ajay Sahai, director general of the Federation of Indian Export Organizations (FIEO), a body backed by India’s commerce ministry.

Sahai, who is aware of the Russian request, said that even small and medium-sized exporters who can meet some requests and had previously exported to Iran after the Western sanctions are not thrilled.

Major Indian lenders are also reluctant to handle direct rupee trade transactions with Russia months after the mechanism was introduced, fearing sanctions.

Indian imports from Russia record high

Indian exports to Russia are declining

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