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September 30, 2023

Exporters Sought Resumption of Shipment via China to CIS Countries Amid Russia-Ukraine Crisis

By Shivani

Following Russia’s invasion of Ukraine, Indian exporters have sought a resumption of exports to Commonwealth of Independent States (CIS) countries via China. The exports to CIS countries have stopped as ships are not moving through the Black Sea.

Ukraine, Azerbaijan, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, and Uzbekistan are among the CIS countries.

The proposed route – India to Qingdao by ship, then to the CIS via railways – has been inactive for over a year. The proposal was made during a meeting between the Commerce and Industry Ministry and stakeholders.

According to an industry representative, the government has the option of reviving the Rupee-Ruble mechanism, even though a similar one with Iran had limited success due to many buyers’ inability to make payments in a foreign currency or from a third country.

Exporters have suggested that such payments be made in Russian currency. They also looked for any export benefits for payments made in that currency that are currently available for export in free currencies.

Currently, a significant amount of cargo exported to CIS countries passes through Russian Railways. “We have proposed this route through China to CIS countries because Indian banks will be hesitant to deal with documents showing the route through Russian ports for goods destined for the CIS,” an exporter explained.

“We should look into restarting exports through Qingdao by talking to some of the major shipping lines or the Association of Container Shipping Lines,” said Ajay Sahai, director-general of the Federation of Indian Export Organizations (FIEO).

Another industry representative suggested that Russia may look to India for its food and chemical needs, as these are key imports. A clogged transit route, on the other hand, affects not only current exports but also the possibility of increased shipments.

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