Chennai: With Russia facing economic sanctions from key nations, exporters and importers in India are worried about their shipments. As several banks have been placed under sanctions, making and receiving payments for shipments is currently a major challenge.
“Exporters and import-ers are currently in a wait and watch mode. The biggest challenge seems to be payment for shipments as several banks have been placed under sanctions by the US, UK and European Union. Whether they would be able to make payments in US dollar, pound or euro is not clear. Unless this is sorted out, shipments cannot be made as they might get stuck in between,” said Ajay Sahai, director general and CEO of the Federation of Indian Export Organis-ations (Fieo).
Exporters and importers who had negotiated in these currencies cannot change it to Russia’s rouble. Further, duty drawback and RoDTEP schemes are based on the dollar payments. “We will have to see whether the SWIFT mechanism works,” he added.
Further, fuel and freight charges have gone up. The rising crude oil prices have increased fuel charges. Shipping companies are also charging more for insuring the goods considering the risk factor.
Meanwhile, the Export Credit Guarantee Corpor-ation (ECGC) has decided to withdraw coverage for shipments to Russia with effect from February 25. ECGC in a communication had said: "based on the near-term commercial outlook, it has been decided to modify the country risk classification of Russia under the short-term and medium-and-long term with effect from February 25."
The ECGC has now put Russia in the restricted cover category (RCC-I) from the earlier 'open cover' category, which will make it tougher for exporters to secure cover for their shipments.
Russia is a gateway for trade with CIS countries. These countries together account for $5 billion exports annually. India exports pharmaceutical products, machinery, electrical & electronics goods, organic chemicals, iron & steel and plastic products to these countries.
FIEO has opened a helpdesk for Russian and CIS traders and are collecting data about the challenges they face in shipping and receiving goods.
