"Payments issue needs to be worked through": Jaishankar on Rupee Vostro Account system

New Delhi [India], April 17 : External Affairs Minister S Jaishankar on Monday said that there are discussions going on between India and Russia on the payments issues and they need to be worked through.
While addressing the India-Russia Business Dialogue, Jaishankar spoke about the expansion of the correspondent relationship network under International Trade Settlement in Indian Rupees through the Special Rupee Vostro Account system.
"There are also discussions on the payments issue. The expansion of the correspondent relationship network, under the scheme of International Trade Settlement in Indian Rupees through Special Rupee Vostro Account system. And I think the payments issue clearly needs to be worked through between our systems. It is something we will also be discussing at the meeting tomorrow," Jaishankar said.
A vostro account is an account that domestic banks hold for foreign banks in the former's domestic currency. Rupee Vostro Accounts keep the foreign entity's holdings in the Indian bank, in Indian rupees
In his remarks, Jaishankar said that the two nations were having discussions regarding Free Trade Agreement between India and the Eurasian Economic Union. He stated that the COVID-19 pandemic disrupted those discussions. He stressed that India and Russia are in advanced negotiations on Bilateral Investment Treaty (BIT).
"We have been having discussions for a Free Trade Agreement between India and the Eurasian Economic Union. The Covid interrupted those discussions, so I would very much hope that our colleagues will pick up on this. We will certainly encourage them from the Foreign Ministry side because we do believe that they will make a real difference to our trade relationship," Jaishankar said.
"We also are in advanced negotiations on a new Bilateral Investment Treaty (BIT), and we appreciate that this is perhaps necessary; certainly useful to provide sufficient confidence to investors," he added.
In his remarks, EAM said that there has been some discussion regarding the importance of connectivity initiatives. Jaishankar said that the International North-South Transport Corridor and Eastern Maritime Corridor are given due consideration.
"Now, there has been some talk, rightly, in my opinion, about the importance of connectivity initiatives. The International North-South Transport Corridor as well as the Eastern Maritime Corridor, which is the Chennai-Vladivostok Corridor, and these are being given due consideration," Jaishankar said.
While addressing the India Russia Business Dialogue, Jaishankar said that there have been a number of events in the past few years, including the Suez Canal blockage which highlight the importance of having more connectivity options.
"I think there have been a number of events in the last few years, including the blockage of the Suez Canal which underline why it is necessary for us to have many more connectivity options. Not all obstacles are necessarily logistical, but I think everybody would agree that to the extent we can address this. And certainly the Eastern Maritime Corridor, I think, fits in with our goal, what is called "Act East Policy", as well as the Russian policy of having the Far East come in as a additional driver of the economy. So, I think there is a synergy there which is waiting to be tapped," he said.
Jaishankar said that Prime Minister Narendra Modi-led government in the past nine years has undertaken a number of important economic reforms. In his address, he spoke about the business opportunities for Russia in India.
"Now, in the last 9 years, the Modi Government, again I say this particularly for the benefit of our Russian colleagues, that the Modi Government has undertaken a number of important economic reforms. And these are actually of interest to you, if you are looking and evaluating opportunities in India, because they do include incentivizing production, in doubling down on infrastructure and logistics, in rationalizing taxation, in moving the economy from the more informal to the organized sector, and in cleaning up and resourcing the financial system," Jaishankar said.
"We would like our friends in Russia to appreciate this transformation which is underway, because its compounding strength will enable both of us to strengthen each other's strategic autonomy, if we can translate this into economic cooperation," he added.
Jaishankar noted that India and Russia in the past decade have witnessed enhanced levels of cooperation in various sectors, including in the fields of energy, science & technology, and inter-regional cooperation. He said that Russia and India have also been discussing how to expand and diversify bilateral trade and economic cooperation between the two nations.
EAM S Jaishankar on Monday said that India and Russia have crossed the bilateral trade target of USD 30 billion before 2025 adding that it is expected that the trade will continue to increase.
He said, "We have crossed the bilateral trade target of USD 30 billion before the year 2025 which was the target year given to us by our leaderships. And in fact for the period April 2022 - February 2023, I understand that the trade is actually about USD 45 billion and the expectation is that this will continue to grow."
Jaishankar said that India and Russia need to motivate businesses on both sides. He said that India is determined to make the country a "global manufacturing hub." He stressed that the 'Make in India' initiative is aimed at promoting greater manufacturing capacities. He said that there will be greater production based in India.
"Where India is concerned, I would like our Russian friends to appreciate that you can see there are big changes which are going on. There is a 'Make in India' initiative which is aimed at promoting greater manufacturing capacities. And we are determined to make India a major global manufacturing hub. There will be greater production based in India. And not just for our own growth, but also because we believe that in times of global instability, that the world economy requires more resilient and reliable set of supply chains," Jaishankar said.
Meanwhile, Russian Deputy Prime Minister and Minister of Industry and Trade, Denis Manturov on Monday asserted the possibility of "wide use of national currencies and currencies of friendly countries" to "allow the minimization of expenses and currency risks."
While addressing the India-Russia Business Dialogue, Manturov said, "Resolving the issue of smoothness of mutual settlements could give another impetus for trade and industrial cooperation. Within the framework of the intergovernmental dialogue, we propose to consider the possibility of the wide use of national currencies and currencies of friendly countries. This will allow the minimization of expenses and currency risks."
Manturov said that Russia is looking forward to intensifying negotiations on Free Trade Agreement (FTA) with India. He said, "Together with Eurasian Economic Commission, we are looking forward to intensifying negotiations on Free Trade Agreement with India."
"Additionally, we are working on signing of Russia-India Bilateral Agreement for the Promotion and Protection of Investments," Manturaov said at the event which was organised jointly by the Federation of Indian Chambers of Commerce and Industry and Russia-India Business Council.
Denis Manturov is on a two-day visit to India to co-chair the Intergovernmental Russian-Indian Commission, which is aimed at enhancing trade ties between the two countries. On the first day of his visit, Manturov co-chaired the 24th India-Russia Inter-governmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation (IRIGC-TEC). The IRIGC-TEC is the primary institutional mechanism supervising economic cooperation.