Activated carbon exporters face banking curbs in shipping to Russia, Sudan
Joshy Joseph questioned the rationale behind such restrictions when India continues to import crude oil from Russia and asked why activated carbon cannot be exported because of EU sanctions
Indian activated carbon exporters are encountering new obstacles due to banking curbs imposed on shipping to Russia and Sudan, as some banks restrict transactions citing international sanctions and higher compliance requirements. Joshy Joseph, vice president of the Activated Carbon Manufacturers Association of India, highlighted that certain banks have issued letters prohibiting trade with Russian buyers, citing EU sanctions against the country.
Joseph questioned the logic behind these restrictions, especially considering India's continued crude oil imports from Russia. He queried why activated carbon cannot be exported when EU sanctions have led European companies to cease supplying.
Russia represents a significant market for Indian activated carbon exporters, with an estimated annual consumption of 25,000 tonnes. The market had been expanding following the departure of European firms due to sanctions. Rupee-based transactions had previously facilitated trade between India and Russia. However, Sudan is emerging as another potential market owing to its gold mining industry, with India exporting around 20,000 tonnes of activated carbon, primarily to support gold mines.
Yet, some banks have now also imposed restrictions on transactions involving Sudan, citing similar sanctions and compliance measures. If these restrictions persist, Joseph warned that Chinese manufacturers could gain a foothold in these markets with more competitively priced products. The activated carbon industry is already facing difficulties due to the West Asia crisis, the Russia-Ukraine conflict, container shortages, surging freight rates, and escalating raw material costs, putting pressure on exporters.
According to Joseph, India exported approximately 1.8 lakh tonnes of activated carbon during the previous fiscal year, valued at ₹4,688 crore. The industry had approached the Coconut Development Board and the Federation of Indian Export Organisations (FIEO) regarding the RBI, DGFT, or Customs not issuing clear prohibitions on exporting activated carbon to Russia or Sudan.
Banks noted in their letters that activated carbon falls under categories listed in Annex XXIII of Council Regulation (EU) No. 833/2014, subjecting transactions to heightened sanctions scrutiny and export control measures. Evolving international sanctions frameworks have led to stricter due diligence among correspondent banks, particularly for transactions involving goods and jurisdictions under heightened sanctions scrutiny.
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