As the western countries and China have refused the supply of aircraft parts to Russia, Valery Kudinov, an official of Rosaviatsia, said that Russia would look for opportunities to sources parts from other countries including Turkey and India.

Russia’s aviation authority revealed on March 10 that the Chinese refusal has come after the Boeing and Airbus halted supply of aircraft components. But for India and other countries, Russian plan to source spare parts from them would not be just a commercial proposition as it would have been in normal times. It may need some deft diplomacy.

India has trade relations with Russia and Ukraine. Although Russian crude oil is around 2.3% of total oil import of India, India buys other items from Russia and Ukraine. As economic sanctions were imposed on Russia, Indian businesses that buy sunflower oil from Russia and Ukraine and sell tea in the region have suggested reactivation of the Rupee-Rouble trade mechanism as a way to continue uninterrupted supplies, especially following the restriction of Russian banks from SWIFT payments networks.

Meanwhile, Indian exporters are worried as they have payments of $ 400-600 million pending in Russia. Sending fresh consignments is also difficult as leading shipping lines have suspended deliveries to and from Russia. Soviet Union era, India-Russia Rupee-Rouble trade is now being seen as a solution by Indian businesses for days to come because it is uncertain how long Western sanctions on Russia would continue.

At present Indo-Russian trade stands at $9 billion, Russia would look up to enhance its procurement of consumer goods including textiles and leather products from India. Reviving Rupee-Rouble trade could make trading between the two countries free from dependence on dollar as in the past. Russia’s Deputy Chief of Mission reports point out that there has been a five-fold increase in payments in national currencies from about 6% earlier to over 30% now. This may increase further as economic sanctions on Russia along with its exclusion from SWIFT has stopped use of dollars for transactions with Russia. Businesses in both the countries can engage in trade with more convenience if Rupee-Rouble trade is institutionalized.

After the Ukraine war began, then Ambassador designate of Russia to India, Denis Alipov, said “as regards S-400 deliveries from Russia, rest assured it will not be impacted in any way. There is 100% surety on that. As regards overall trade relations and economic cooperation, “we have a mechanism and means to doing business bilaterally between our countries in national currencies”.

Meanwhile India has stepped up its efforts to set up an alternative payments system to maintain its trade with Russia. Already a panel has reportedly suggested to identify a potential bank that can facilitate trade payments between the two countries, particularly for prioritizing edible oil and fertilizer imports as well as payments owed by India. India imports about 10-11% of edible oil from Russia- Ukraine region.

The Russian government is planning to order domestic airlines to pay for leased aircraft in Roubles and could bar them from returning planes to foreign companies if leases are cancelled. As Western economic sanctions would not allow payment in Dollars while Roubles would be unacceptable to foreign companies, the payment problem would cause difficulty in continuing lease contracts.

Already Russia’s big firms, also listed in London and New York markets, have saw their international shares slump virtually to zero when the crisis broke out and have now been stopped.

Meanwhile the Russian Central Bank is scheduled to meet on March 18 as the financial crisis is intensifying and increasing interest rate is further putting a downward pressure on investment as it has doubled to 20 %. Russia has already brought in widespread capital controls to try and prevent a full blown financial crisis.

The greatest test for Russia’s capacity to withstand the financial consequences of war would be its payment liabilities i.e $ 117 million on two of its dollar denominated bonds, due to be paid on March 16. Russia has been signaling it will not pay. It also insisted that if it pays, it would do so only in Roubles. Technically, it has a 30 day grace period. However, if Russia fails to pay, it would be first ever default since 1917 Bolshevik revolution.

It s expected that in the 4th round of dialogue the likely direct talk between state heads of Russia and Ukraine would aim at halting the war, and finding an amicable solution to the problems through dialogue.

Western investment banks like SP Morgan now expect the economy to plunge 7 % this year due to combination of worries of bank run, adverse effects of economic sanctions and steep surge in inflation due to 40 % slump in the Rouble. There are many observers who anticipate that the present Rouble crisis would push the economy down by 12%, higher than that of 1998, which pushed the economy down by 10 %.