During the visit by a senior Russian official to New Delhi last month, Moscow raised the issue of pending payments for defence supplies with the Indian government. The Russian side also said that the future supplies of military platforms to India could be adversely affected with mounting dues. Among the key military imports from Russia that may get affected because of the payment problems is the S-400 air defence system, according to the report.
Sergey Chemezov, CEO of Russia’s military-industrial group Rostek, was in New Delhi last month to discuss the vexed issue of pending Indian payments for Russian defence supplies. After the sanctions imposed by Western countries on Russia following its invasion of Ukraine disrupted existing payment mechanisms, India and Russia have been struggling to sort out payment issues.
India imports a huge quantity of military equipment, including spares and ammunition, from Russia. The trade imbalance has also increased in Russia’s favour due to heavy imports of crude by India. India’s imports from Russia grew by 417% to $29 billion in the April-November period.
The two countries have since explored various options for making payments to Russia that bypass Western sanctions, including the opening of Vostro accounts by certain Indian banks, but the issue remains unsolved.
In October 2018, India had signed a $5.5 billion order with Russia for five S-400 missile systems. It was initially stated that the delivery would begin within 24 months, but the supply of the system to India was delayed. India has already received one S-400 system from Russia, which according to reports, was delivered in November 2021.
Meanwhile, Russian buyers are offering payments to Indian exporters in Yuan, reports Mint. Yuan is being offered at a time China has become a stronger trade partner with Russia after the Ukraine war.
“Russian buyers prefer payments in euro or Chinese yuan. It seems that Russia has sold oil to China in yuan, and the money may be being used for importing from other countries, including India,” Ajay Sahai, director general of Federation of Indian Export Organisations said.
