New Delhi, Feb 10 (UNI) India-Russia trade can cross the targeted 10 billion dollar by 2010 and double in next five years if trade irritants and procedural hassles are resolved, said an industry body survey.
Industry chamber Federation of Indian Chambers of Commerce and Industry (FICCI) is the survey said Indian business houses identify credit risk, high Export Credit Guarantee Corporation (ECGC) coverage cost, insurance, Russian ban on import of farm items, registration time for pharma products and investment safeguards as trade-inhibiting factors between the two nations.
The survey reveals that payment system involving the letter of credit(LC) is highly ineffectual and Indian businesses have to negotiate with their Russian counterparts directly.
In such cases Russian importers are asked to pay an advance upfront with the balance payable after execution of export order.
But Indian exporters face problems in receiving balance payments.
FICCI suggests the government encourage Indian banks to negotiate with Russian banks in developing a coherent system involving LCs.
''A system wherein Indian banks discount LCs issued by Russian banks would mitigate credit risk involved in transactions with Russian Federation,'' a statement said.
The survey further reveals that ECGC coverage for exports to Russia is very expensive as many Russian companies are in high-risk category because their antecedents and credentials are difficult to check.
Russian banks do not provide credit reports of companies; though the world over it is a standard practice for banks to provide credit rating and credit worthiness of companies that conduct bank transactions.
It says insurance market in Russia is not developed and there are hardly any products that provide insurance cover for stocks and raw materials.
Indian companies also lament Russian ban on bulk import of agricultural commodities from India, saying an isolated incident of contamination by pests and weevils should not trigger wholesome ban as has been done by Russia's animal and plant health watchdog Rosselkhoznadzor.
It banned imports of tea, coffee, rice and tobacco from India last month.
The chamber called for reducing to half the two-year time it takes for an Indian company to register its generic pharmaceutical products in Russia, adding some Indian companies are even ready to set up manufacturing base in Russia if they are assured their investments would be safeguarded.
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