The modus operandi employed by exporters has been to import goods or inputs materials/inputs the duty exemption scheme of the policy and seek the customs department's permission to supply the same directly to the Russian Federation against rupee repayment debt, reports received by DGFT say. They have sought to achieve this by showing an "inflated" f.o.b. value by "manipulating" the export documents.

To end the switch trade, DGFT has laid down that the prescribed value addition must be achieved by subjecting the imported goods/inputs to "some kind of tangible processing or manufacturing process so as to add up to its intrinsic value in a realistic manner".

In this regard, the DGFT maintains that a mere increase in the value of exportable goods on paper without any increase in their intrinsic value through the value addition goes against the provisions of the policy.

The value addition norm aims at increasing exports to Russia of 21 high-tech items under the debt the debt repayment route. Earlier, the value addition level was pegged at 75 per cent.

The high-tech items include five computer hardware items, six telecom equipment, three electro-medical equipment, two items of printing machinery as well as two computerised numeric controls for machine tools, photocopiers and assemblies and components for production of TV sets.

India and Russia have finalised their draft guidelines regarding utilisation of the rupee debt in Indian projects.

Indo-Russian trade increased from $ 906 million in 1993-94 to $ 1,311 million in 1994-95 to $ 1,901 million in 1995-96. After dropping to to $ 1,439 million in 1996-97, the volume of two way trade marginally increased to $ 1,568 million in 1997-98. It is stated that these figures do not reflect the true picture on the trade exchanges taking place between the to countries. A substantial amount of Indian goods enter Russia by way of shuttle trade or through export of Indian origin goods to Russia from Singapore,Hong Kong, Thailand, Malaysia and Middle East.

The two-way trade turnover stood at $5.5 billion when the trade was conducted in Indian rupees based on annual plans.Following the break-up of USSR, the rupee trading system was abandoned.