India’s PM to Address Trade Imbalance with Russia: A Look at the Implications

Indian Prime Minister Narendra Modi is set to tackle the issue of trade imbalance and explore alternative payment mechanisms during his upcoming visit to Moscow. The historical Indo-Soviet Trade Agreement from 1953 laid the foundation for economic ties between the two countries, grappling with trade imbalances and non-convertibility of currency.

Amid the ongoing conflict in Ukraine, the focus is on settling trade payments and enhancing economic relations. Russia’s shift towards the yuan as an alternative currency poses challenges for India, raising concerns about trade dependence on potentially adversarial states. The need to diversify trade settlements, possibly through the rupee-rial model or Project Nexus initiatives, emerges as a viable solution.

Additionally, expanding India’s semiconductor industry and exploring export opportunities to Russia could help reduce the trade deficit. Establishment of alternative SWIFT mechanisms and leveraging multilateral platforms like BRICS+ can pave the way for a more balanced global financial system.

Modi’s visit signifies India’s strategic balancing act amidst geopolitical tensions, highlighting the shift towards multipolarity in a world dominated by Western sanctions. The discussions between the leaders are expected to delve into various challenges and opportunities for enhancing bilateral relations while navigating complex economic landscapes.

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