5 Ways How Using Rupee-Ruble As Trade Currency Be Favourable For Indo-Russian Business Relations
Grow Your Business, Not Your Inbox
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
In the recent era, Indian and Russian industries have increased transactions and payment in trade relations via Rupee-Ruble method. This would help both countries to boost economic, defense and trade cooperation without unwanted interruptions or excessive financial burdens.
Comfortable Business Operations
According to the Russian Deputy Ambassador Roman Babushkin, there has been a fivefold increase in payments in national currencies from about 6% to over 30% now. This has made business operations easy and convenient for both countries. During the trade, economic interaction was difficult due to dependence on a universal currency or foreign currency like Dollar.
Increase in Trade percentage
By using the domestic currency for transactions and payments in bilateral trade gives an opportunity to make easy business in result to which, it increases the trade percentage. The bilateral trade between India and Russia stood at 11 Billion Dollars for the current year. Russia is seeking to increase the project demands so as to encourage bilateral relations as well as economy. According to the Russian diplomat, discussions in Vladivostok would revolve around increasing trade, with an ambitious target of $30 billion annually by 2025.
Boost Employment in related sectors
By simplifying the payments, nations find it easier to get heavy inflow of business and trade with fellow countries. This in return gives rise to the opportunities in employment and economy. India and Russia are dealing in sectors like Defense, Trade and Economic sectors which would need a lot of manpower to manage its working. These steps in return give rise to the demand of manpower which directly affects the employment rate in a positive way.
Curb down time consuming process
Many Russian companies with expenses in India had no choice but to send Dollars to be converted into local currency by an onshore entity. This is an expensive and time consuming process which affects the trade relations and leads to slower economy rate.
Lowering Down Administrative Costs
As an importer paying in local currency helps the company to pay administrative costs 2-3% less than the cost dealing in foreign currency. It expands the business and increase the demand of trade.
India and Russia have robust partnership related to defense sector and is currently facing the threat of unilateral sanctions by the US for the purchase of S-400 Air Defence Systems. The two countries have opted for a non dollar route to make payments.