Indian leather exporters head to Russia to boost trade amid sanctions hurdles

A delegation of more than 20 Indian leather industry executives is set to arrive in Russia on 26 August, embarking on a three-day mission to secure fresh investment and unlock untapped export markets. The visit comes as New Delhi and Moscow strive to hit a $100 billion bilateral trade target by 2030, despite the complex shadow of Western sanctions.

R Selvam, Executive Director of the Council for Leather Exports, confirmed the delegation will participate in the Euro Shoes Premier Collection in Moscow. The primary objective is to bridge a significant gap in trade; while India currently exports between $60 million and $80 million worth of leather goods to Russia, officials believe the potential for growth in garments, footwear, and tannery collaborations remains vast.

The industry’s momentum has, however, faced recent turbulence. While exports of leather and footwear to Russia grew from $44.84 million in 2022-23 to $62.48 million in the following year, the first quarter of this fiscal year saw a decline. Exports dropped to $14.21 million between April and June, down from $16.34 million in the same period last year.

According to Selvam, this downturn is largely a byproduct of the Russia-Ukraine conflict. Western sanctions, specifically those imposed on Russia's Sberbank by the US Office of Foreign Assets Control (OFAC), have caused many Indian banks to stop issuing Bank Realisation Certificates (BRC). This administrative bottleneck has made it difficult for exporters to verify payments, though those dealing directly in rupees have managed to maintain shipments.

The leather mission is part of a broader diplomatic push to address a stark trade imbalance. India’s exports to Russia stood at just $4.3 billion last year, dwarfed by $61.4 billion in imports—of which 88 per cent was comprised of crude oil and petroleum products. To narrow this $57.1 billion deficit, India is aggressively promoting sectors ranging from electronics and pharmaceuticals to shrimp and leather.

Negotiations are currently underway to reduce Moscow’s non-tariff barriers and expand the use of local currencies. By seeking technology collaborations and manufacturing partnerships during this month’s visit, the leather sector hopes to play a pivotal role in rebalancing a trade relationship currently dominated by energy.