India-Russia Trade Faces Banking Hurdles Amid US Sanctions Concerns

In a recent statement, Russian Ambassador Denis Alipov highlighted significant challenges impacting India-Russia trade, citing “over-cautiousness” among Indian banks due to concerns over exposure to US secondary sanctions. This reluctance, Alipov stressed, has underscored the need for BRICS nations to push for a more equitable role in global financial governance.

Prime Minister Narendra Modi and President Vladimir Putin had set an ambitious trade target of $100 billion by 2030. Although the trade volume has already reached $30 billion ahead of the initial 2025 milestone, India remains concerned about its limited export share, which stood at less than $5 billion in the $65.7 billion bilateral trade total for 2023-24.

At a media briefing held at the Russian embassy, Alipov pinpointed banking hesitancy as the “biggest problem” in expanding bilateral trade. “Indian banks are hesitant to engage with Russian entities,” he said. The primary issue is that most banks have accounts in US dollars, and given the US’s meticulous oversight of financial transactions involving Russia, these banks risk being targeted by secondary sanctions.

Financial Caution in Indian Banks and Global Power Dynamics

According to Alipov, the US government closely monitors transactions between Indian banks and their Russian counterparts. “The US is very meticulous in tracking these transactions and threatening secondary sanctions immediately,” he noted. This intense scrutiny, Alipov argued, is indicative of a larger global issue where select countries wield disproportionate influence over financial matters, often leaving BRICS nations, including India and Russia, in a constrained position.

He questioned the extent of US influence on India’s financial autonomy. “What would happen if the US asked India to reduce its economic interactions with other countries, like Bangladesh? Would Indian banks remain cautious in that situation too?” Alipov’s question resonates with growing discussions within BRICS about the need for stronger, independent financial pathways, free from unilateral economic pressure.

Alipov’s comments on India-Russia also align with India’s established stance of recognizing only United Nations-mandated sanctions, avoiding compliance with unilateral measures. He expressed optimism that Indian banks would increasingly adopt a broader, risk-mitigated approach to engage in diverse trade partnerships without undue fear of US sanctions.

Growing India-Russia Relations and Future Trade Prospects

Despite these challenges, Alipov shared an optimistic outlook on India-Russia relations. He noted that 2024 had been a “particularly productive” year, especially following the July summit between Modi and Putin, where both leaders emphasized economic cooperation. “Trade has grown exponentially,” Alipov remarked about India-Russia, citing progress across various sectors.

Both countries aim to speed up the process of establishing a Free Trade Agreement (FTA) between India and the Eurasian Economic Union. Such a deal could play a significant role in streamlining trade and boosting economic engagement. In addition to trade, Alipov pointed to expanding logistical routes between the two nations, including the Northern Sea Route and the Vladivostok-Chennai maritime corridor, both seen as critical to enhancing connectivity and reducing logistical barriers.

India-Russia collaboration extends beyond trade. In the nuclear sector, Russia has undertaken the construction of six reactors at the Kudankulam nuclear power plant in Tamil Nadu. With two more reactors soon to join the national grid, Russia and India are also exploring further strategic plans for nuclear cooperation. “We have huge plans for the future,” Alipov stated, signaling continued efforts to build and reinforce India-Russia ties in multiple dimensions.

The Role of BRICS in Global Financial Reform

Alipov’s statements on India-Russia also highlight the evolving role of BRICS as a voice for the Global South. He dismissed Ukrainian President Volodymyr Zelensky’s comments regarding the BRICS Summit in Kazan as “completely delusional” and argued that the BRICS bloc provides a platform that “reflects current realities” without opposing Western countries. “BRICS is not anti-West but non-West,” he emphasized, underscoring the bloc’s stance as a constructive participant in global economic discussions.

As India and Russia advance their cooperation, both nations are gearing up for the Inter-Governmental Commission (IGC) on trade, economic, scientific, technological, and cultural cooperation, scheduled to be held in New Delhi on November 12. The two countries are also preparing for another session focused on defense cooperation, signaling their commitment to a broad-based partnership.

India-Russia Path Forward: Building a Balanced Global Financial System

Alipov’s remarks underscore a broader movement among BRICS nations to advocate for balanced representation in international financial matters. By calling for the “voices of India, Russia, and other BRICS nations to be considered on an equal footing,” he emphasizes a collective ambition to reshape the global economic landscape in a way that respects the sovereignty and unique economic needs of all countries.

India’s relationship with Russia, anchored in mutual respect and shared goals, reflects a strategic partnership capable of adapting to the challenges of a complex international environment. As both countries look towards 2030 and beyond, their commitment to enhancing trade, expanding nuclear cooperation, and pushing for a more balanced financial world order positions them as significant contributors to global stability and economic progress.

Also Read:Kanwardeep Keenu Gill: Pioneering Excellence in Hong Kong Women’s Cricket