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India, Russia trade to hit $20 bln by 2015

Trade between India and Russia has the potential to hit $10 billion by 2010 and $20 billion by 2015 if some obstacles like high credit risk and procedural hassles are addressed, the latest industry survey says.

Both countries will work hard to remove obstacles that hamper bilateral trade such as insurance cover, Russia’s ban on bulk import of farm items, slow registration process for Indian pharmaceutical products, and low safeguards for investments, said a survey by the Federation of Indian Chambers of Commerce and Industry (FICCI). The survey, conducted among leading business houses ahead of a three-day visit to India by Russian Prime Minister Victor A. Zubkov starting Monday, highlighted issues faced by Indian exporters in Russia.

“Indian exporters say that in the absence of letters of credit, they have to negotiate with their counterparts directly. In such cases, Russian importers are asked to pay an advance payment upfront with the remaining amount being paid after the execution of the export order,” FICCI said. “In the past, Indian exporters have faced problems in receiving the balance payment from their Russian counterparts,” it said. The chamber recommended that the government should ask Indian banks to develop a system of issuing letters of credit in cooperation with Russian banks. The survey also said that Indian companies face difficulties in establishing credit worthiness of new Russian companies. “Russian banks also do not provide credit reports for companies on behalf of which they conduct transactions. The world over, it is a standard practice for banks to provide credit rating and reports on companies that conduct their transactions through the bank,” the survey said. “However, requests made to Russian banks for such information about their clients do not elicit any response.” The survey also said that Russia’s insurance sector does not offer products that cover risk for stocks and raw materials.

FICCI also said the registration process of generic pharmaceutical products in Russia takes almost two years. While this was the case for Indian companies, applications for registration of products made by pharmaceutical companies from Eastern Europe were normally cleared in about a year. Indian exporters have also urged the Russian government to reconsider the ban on bulk import of agricultural commodities from India. (