Trade Dynamics
Russia FPI inflows into India rise in aftermath of trade settlement in rupee
This story was originally published at 18:22 IST on 10 March 2025
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NEW DELHI – Russia's Foreign Portfolio Investment into India, which began only in 2023-24 (Apr-Mar) in the aftermath of the initiation of settlemnet of bilateral trade with Moscow in local currency, was INR 28.30 million in Apr-Jan of the current fiscal year, according to Minister of State for Finance Pankaj Chaudhary's written reply to a question in the Lok Sabha.
India had received an FPI inflow of INR 8.30 million from Russia in FY24, Chaudhary said on Monday. Before FY24, Russian portfolio investors did not invest in India. Russia's Foreign Direct Investment equity inflows into India has also grown to $18.45 million in Apr-Dec, compared to $5.16 million in the twelve months of FY24, according to Chaudhary's reply.
Russian exporters, who had accumulated billions of rupees in their vostro accounts with Indian banks, had started investing funds into India in 2023. In fact, the Reserve Bank of India had also amended norms under the Foreign Exchange Management Act to allow Russian traders to make investment in treasury bills issued by the Indian government.
To avoid trade disruption after Russian banks were banned from the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, New Delhi and Moscow had agreed to settle trade in local currency through vostro accounts in 2022. India has been importing large volume of crude oil from Russia at a discounted price after Western nations imposed economic sanctions on Moscow for invading Ukraine in 2022.
Russia has been source of crude oil import for India since FY23, with a twelvefold jump in inbound shipment of Russin crude oil that year, and 50% rise in FY24. Russia's share in India's total oil imports surged to 33.4% in FY24 from a mere 2% in FY22.
However, India's trade dynamic with Russia is up for a major reset in the near future as New Delhi has committed to increase its energy imports from the US. After the US President Donald Trump expressed displeasure over Washington's trade deficit with India, Prime Minister Narendra Modi, in a meeting with Trump last month, committed to make US the leading supplier of oil and natural gas.
The US is India's top export destination, with its share in India's total merchandise exports at about 17%. India exported goods worth $77.52 billion to the US in FY24 and had a trade surplus of $35.32 billion. The US had a share of only 3.6% in India's total oil imports in FY24. End
US$1 = INR 87.33
Reported by Krity Ambey
Edited by Deepshikha Bhardwaj
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