India, Syria Discuss Trade in Local Currencies to Dodge Western Sanctions

New Delhi (Sputnik) — India and Syria are mulling ways to trade in local currencies as they aim to boost bilateral trade to at least $500 million by 2020. Reviving faith in the security situation of war-torn Syria, one of India's biggest business delegations comprising 84 members wrapped up their Syria visit on Tuesday after discussing payment mechanisms and investment opportunities with the authorities there.

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Sanctions backed by Western powers have been in force against Syria for many years. They have had a crippling effect on India's trade and investment in the country. The West has made the withdrawal of sanctions conditional on a political solution.

 "The delegation had detailed discussion on payment mechanism and banking arrangements, the two main stumbling block in trade and investment. Trading in local currencies, offsetting of trade balance with investment were some of the options discussed with the Syrian authorities," said Ganesh Kumar Gupta, president of the Federation of Indian Exporters' Organization (FIEO), who led the Indian delegation to Syria.

It is being expected that India's UCO bank, which had offered banking facilities to Iran in the past, will provide a payment mechanism to Syria. The arrangement will create a secure trade channel and also provide a much-needed cushion for Indian exports to the country at a time when the Indian rupee is particularly weak against the US dollar. The two countries also expect a massive jump in bilateral trade from $175 million in 2017 to $500 million in 2020 with the new export strategy.

"Indian Exports should touch $350 million, while imports should increase to $150 million by 2020," Ganesh Kumar Gupta added.

FIEO said that the import of automobiles in Syria is about $293 million of which Indian exports account for less than $1 million. Similarly, of the $303 million worth of electrical machinery imported into Syria, India's exports are only $4.18 million. In the mechanical machinery and appliances sector, India contributes only $9 million out of $250 million worth of imports. In the plastics and articles category where Syrian imports total $268 million, Indian exports to the nation are a mere $3.2 million. Moreover, India accounts for less than 1 percent of total imports ($145 million) of iron and steel in Syria.

The Confederation of Indian Industries (CII) has also expressed satisfaction over the improving security situation in Syria.

"Terrorism and militancy are on the decline in Syria. Life in Damascus and other cities has returned to normalcy, many security checkpoints have disappeared and various late-night cafes/restaurants can be seen doing business to their full capacities," said a statement recently issued by the CII.

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India's Minister of External Affairs Sushma Swaraj was scheduled to visit Syria but was unable to "due to the prevailing situation in that country." Fresh dates will be decided in mutual consultation with the Syrian side," a spokesperson of the Ministry of External Affairs said while announcing the move on September 8.

Swaraj was scheduled to hold a meeting with President Bashar al-Assad and other ministers of his government and interact with Indian and Syrian companies.