After US tariffs and the ongoing West Asia crisis, India's activated carbon exporters are facing another hurdle, with some banks restricting transactions for shipments to Russia and Sudan, citing international sanctions and enhanced compliance requirements, according to businessline.
Joshy Joseph, vice president of the Activated Carbon Manufacturers Association of India, told businessline that some banks have issued letters prohibiting transactions with Russian buyers, citing European Union sanctions against the country. He 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.
Banking curbs and the EU sanctions link
Russia is one of the most important markets for Indian activated carbon exporters, with annual consumption estimated at around 25,000 tonnes, according to Joseph. The market had been growing after European companies stopped supplying following the imposition of sanctions. Rupee-based transactions had also helped facilitate trade between India and Russia.
Banks in their letter stated that activated carbon falls within categories covered under Annex XXIII of Council Regulation (EU) No. 833/2014, making transactions involving the product subject to enhanced sanctions scrutiny and export-control measures, businessline reported. Evolving international sanctions frameworks had resulted in enhanced export controls and stricter due-diligence requirements among correspondent banks, particularly for transactions involving goods and jurisdictions under heightened sanctions scrutiny.
Banks in their letter stated that activated carbon falls within categories covered under Annex XXIII of Council Regulation (EU) No. 833/2014, making transactions involving the product subject to enhanced sanctions scrutiny and export-control measures.
Sudan: emerging gold-mining demand under pressure
Joseph, who is also director of Palakkad-based IndCarb, said Sudan is another emerging market because of its gold mining industry. India exports around 20,000 tonnes of activated carbon, driven by demand from gold mines. However, some banks have now restricted transactions involving Sudan as well, citing international sanctions and compliance requirements, according to businessline.
China may gain ground
If the restrictions continue, Chinese activated carbon manufacturers could make inroads in these markets with lower-priced products, Joseph said. African markets are already sourcing activated carbon from China at more competitive prices, while Indian products remain relatively expensive.
Industry pressure and regulatory position
The activated carbon industry is already passing through a difficult period, with the West Asia crisis, the Russia-Ukraine war, container shortages, higher freight rates and rising raw material costs putting pressure on exporters, according to the association vice president.
India exported around 1.8 lakh tonnes of activated carbon during the last fiscal, valued at ₹4,688 crore, he said. The industry has taken up the issue with the Coconut Development Board and the Federation of Indian Export Organisations (FIEO), pointing out that the RBI, the DGFT or Customs has not issued any notification specifically prohibiting exports of activated carbon to Russia or Sudan.
| Metric | Figure |
|---|---|
| Russia's annual activated carbon consumption | ~25,000 tonnes |
| India's activated carbon exports driven by gold mines | ~20,000 tonnes |
| India's total activated carbon exports last fiscal | ~1.8 lakh tonnes |
| Value of India's activated carbon exports last fiscal | ₹4,688 crore |
For now, the banking curbs apply alongside existing pressures from the West Asia crisis, the Russia-Ukraine war, container shortages, higher freight rates and rising raw material costs, businessline reported. The association's submission to the Coconut Development Board and FIEO underscores that no domestic export prohibition has been notified, leaving Indian activated carbon exporters dependent on correspondent banks' interpretation of evolving EU sanctions frameworks.
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