INSUBCONTINENT EXCLUSIVE:
If Russia-Ukraine war drags on, India to consider alternative pay mechanism: reportNew Delhi: India may consider alternative payment
mechanisms for exporters if the Russia-Ukraine conflict continues for a long time and critical trade sectors such as gems and jewellery face
a problem in international cash transfer, government sources said on Tuesday.This consideration came against the backdrop of the
Russia-Ukraine war and sanctions being imposed by western countries, including the Group of Seven (G-7) economies, that has imposed punitive
sanctions against the Russian central bank.They have also decided to remove Russian banks from the SWIFT inter-banking system, intended to
isolate Russia from global trade."India is closely monitoring its foreign trade situation in the wake of the Ukraine situation and may
consider alternative payment mechanisms if the adverse situation continues for a long time and key trade sectors such as gems and jewellery
face a problem in international cash transfer," one of the sources said.Exporters of gems and jewellery have received assurances of support
from Russia's Alrosa, which accounts for about 30 per cent of global diamond output, and sells around 10 per cent of its rough-diamond
output to India.Diamonds account for about 50 per cent of India's gems and jewellery exports.So far, the supply of rough diamonds from
Russia has not been interrupted
Still, the industry is concerned about US sanctions on Russia and the country being banned from the SWIFT financial network, sources said,
adding that the bulk of the payments has been done
The gems and jewellery trade in hubs like Surat is doing well.They added that a lot of business had been contracted by the Indian industry
As a result, payment-related issues have not come up, although banks are cautious.Many manufacturers have made payments in euros.While the
trade has continued without significant impact, the government is constantly in touch with importers and exporters
It is ready to consider adverse outcomes if the situation develops into a long-term international trade crisis.Russia's Alrosa sent a
letter to GJEPC (gem and jewellery export promotion council) on February 28 stating Alrosa is ready to address concerns related to
day-to-day operations in the wake of the US restrictions imposed on Alrosa.The Russian company has told the Indian industry that it has
operated normally, without delays, because of its diverse banking partners
Its settlement with foreign partners has continued; usually, they said.It is estimated that there would not be any short-term impact on the
However, a long-term crisis potentially can have an impact as the industry depends on imports.Alrosa sells 68 per cent of its rough diamonds
by value through trading centres (Belgium 40 per cent, UAE 22 per cent and Israel 6 per cent), 77 per cent sales are through long term
contracts, 12 per cent by tenders, 11 per cent in the spot market.According to the Federation of Indian Export Organisations (FIEO), the
rupee-rouble trade is one of the alternative mechanisms for payments between India and Russia."We have suggested this to the government
Decisions will have to be taken by our central bank
The challenge in this would be fixing exchange rates for the currencies
But, our banks have experience for making payments in local currencies because we have done that with Iran," FIEO Director-General Ajay
Sahai said.Leading exporter of Mumbai and founder chairman of Technocraft Industries India Sharad Kumar Saraf said India could also explore
using the BRICS bank for routing the bilateral trade."We can put one public sector bank as a nodal bank which would monitor the debits and
