Currently negligible Indian textiles and apparel export to Russiaare expected to grow multi-fold once both the countries set a mechanism to accept payments in local currency. The country’s central bank, The Reserve Bank of India is working on building a reference exchange rate framework between rupee and rouble.

Once the framework is established, RBI and Central Bank of Russia will announce customized common reference exchange rate on daily basis, on which importers and exporters can negotiate pricing of the products and payment transactions. This will promote bilateral trade in local currencies bypassing the US dollar.

While Russian banks will open accounts in Indian banks to deposit rouble, Indian banks will have to open account in Russia to deposit rupee, sources said.

Traditionally, India is exporter of textiles and apparel, while Russia imports them to meet its regular clothing needs.

Last year, India’s apparel export to Russia accounted for 0.46 per cent of India’s total apparel export of $14.472 billion compared to 30.44 per cent to the US and 13.27 per cent to the UAE.

India’s apparel export to Russia declined sharply due to COVID-19. The export declined to $57.674 million in 2020 from $75.326 million of 2019. India had shipped garments worth $66.394 million in 2021 while the export was recorded at $76.571 million in 2018 and $84.532 million in 2017.