Exporters see hurdles in paying for shipments to Russia as tough sanctions kick in – The New Indian Express
KOLKATA: Exporters said on Monday that they would face more difficulties for their shipments to Russia with a decision to exclude certain Russian banks from the global financial system SWIFT, because the decision would hinder direct payments for goods shipped to the country of the IEC.
The United States and its main allies, including the European Union and the United Kingdom, decided to disconnect the main sanctioned Russian banks from the Society for Worldwide Interbank Financial Telecommunication in response to Moscow’s invasion of Ukraine.
The exporting community also hopes that if the sanctions, including the one on the banking network, continue, the central government could open a channel for payment in rupees as has been done in the case of Iran in the past.
Export Credit Guarantee Corporation has also decided to withdraw cover for shipments to Russia effective February 25, which is a huge setback for exporters.
“The exclusion of selected Russian banks from SWIFT will certainly have a chilling effect on the smooth functioning of the payment system and the Indian exporting community is expected to face uncertainty or at least a postponement of payments for exports. This could again discourage them from fulfilling further orders. Exports from Russia and India to the country may decrease significantly in the future,” EEPC India Chairman Mahesh Desai told PTI.
The Federation of Indian Export Organizations also expressed apprehension and said payments to exporters would remain blocked for shipments already dispatched and they would hold on to new orders until a new payment mechanism is not forthcoming. in place.
“The disconnection of Russian banks from the SWIFT network has a major impact. However, the Indian government will surely do something to overcome the problem and a mechanism for payment in rupees could be put in place with what we have seen in the case of the Iran in the past,” FIEO (Eastern) President Sushil Patwari said.
He also said: “Oil import payments and receivables for exports may be in rupees as payment settlements in US dollars and Euros will not be possible once excluded from SWIFT.”
Based in Belgium, the SWIFT system is seen as essential to the proper functioning of global finance and Russia’s exclusion from it would hit the country hard.
Tea industry veteran CS Bedi said the majority of exports of the commodity to Russian destinations have been completed, so “no major impact can be encountered now”, but if payments are due, such a move by the Western countries could pose problems.
“The immediate concern is what will happen to receivables owed by Russian importers,” Nipha Exports director Rakesh Shah said.
India is a major supplier of various goods to Russia with around $3 billion in merchandise exports, Desai said.
Engineering exports to the country are expected to reach nearly $1 billion this fiscal year, he added.