World Desk, AnyTV, New Delhi
Published by: Kirtivardhan Mishra
Updated Wed, 02 Mar 2022 08:39 PM IST
Summary
Significantly, a group of countries led by the US, the EU and the UK has removed several Russian banks from the Interbank Financial Telecommunication Service, or SWIFT.
How will the sanctions on Russia affect India?
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Expansion
Now a week has passed since Russia waged war against Ukraine. However, he has not got much success so far. On the contrary, the government of President Vladimir Putin has suffered due to this. So far, the US, the European Union, the UK, Canada and the countries of the G7 organizations have announced tremendous economic sanctions on Russia. The things on which the restrictions have been imposed range from flight services to essential supplies and trade agreements. Apart from this, restrictions have also been imposed on many diplomatically important sectors.
In such a situation, there is increasing concern in India as to how these sanctions of Western countries will affect the relations between Russia and India and this will lead to the important sectors of India’s need, such as defence, oil and gas, food supplies and other sectors. What will be the effect on the supply from One of India’s concerns is that, like Iran, these sectors of Russia should also become unusable for India.
What is the figure of bilateral trade between India and Russia?
According to the Ministry of Commerce of India, India-Russia bilateral trade in the financial year 2020-21 was 61 thousand crore rupees ($ 8.1 billion). Out of this, exports from India were about 19 thousand crores ($ 2.6 billion), while imports reached 42 crores ($ 5.5 billion).
What import-export between India and Russia?
India exports electrical machinery, pharma products, organic chemicals, iron, steel, clothing, tea, coffee and vehicle spare parts to Russia. On the other hand, defense products are at the top of the things that India imports from Russia. Also included are mineral resources, precious stones and metals, nuclear power equipment, fertilizers, electrical machinery, steel products and inorganic chemicals.
What will be the effect on trade if the harsh sanctions on Russia are imposed?
The way sanctions continue on Russia, it is almost certain to have an impact on its trade relations with India. Especially in the defense sector, India may also have to suffer due to these restrictions. Apart from this, the trade of automobiles, engineering products, pharma, telecom equipment and agricultural products is likely to be affected deeply.
The backbone of the banking system will be broken
Significantly, a group of countries led by the US, the EU and the UK has removed several Russian banks from the Interbank Financial Telecommunication Service, or SWIFT. Using this service, any country could transact money with foreign banks without interruption or delay. However, after SWIFT was phased out, there is no longer a faster option for exchanging transaction information between Russian banks. It now has to rely on the old system like Telex, which has been stopped by most of the countries.
Russia has also opened branches of some of its banks in India in view of the growing business relations. These include VTB, Sberbank, VanEconombank, Promvazbank and Gazprombank. Apart from this, two Indian banks – State Bank of India (SBI) and the Central Bank’s joint venture ‘Commercial Bank of India LLC’ are also providing banking services in Russia.
What is the impact of the current crisis on India’s defense sector?
How much India is currently dependent on Russia for the supply of defense products, it can be gauged from the fact that most of the weapons of the Army, Air Force are of Soviet or Russian origin. India needs supplies from Russia for their maintenance and purchase. Not only this, India is also dependent on Russia for Kalashnikov guns and MiG-21 structures. India is also looking forward to the full delivery of its air defense system S-400 at this time.
It has been told that India will delay the purchase of new defense equipment due to the economic sanctions imposed on Russia and its removal from the SWIFT payment system. Actually, India pays for the purchase of any defense product on the basis of installments. In such a situation, there will be further delay in paying India for the S-400 system, equipment needed for tanks and fighter aircraft and other weapons, and in such a situation, the production of these equipment in Russia will also be delayed. That is, the direct impact of sanctions on Russia is likely to affect India’s defense power.
Troubles will increase if America uses CATSA law
Significantly, America has so far been taking action against countries buying defense products from Russia under the CATA Act. The countries that have been subjected to action under this law include the names of countries like Turkey and China. That is, if India is kept within the purview of the CATSA law, then it is likely to cause big losses. This is also likely to hamper the contract for submarines and warships to be bought from Russia.