- Russian Foreign Minister Sergey Lavrov said that Russia has accumulated billion of rupees in Indian bank accounts but to use this money it needs to be transferred to another currency.
- Citing two government officials, news agencies reported that after months of negotiations India failed to convince Russia to keep rupees in its coffers.
- The Kremlin initially encouraged India to trade in national currencies following sanctions on Russian banks and a ban on transactions using the SWIFT messaging system.
- But volatility in the ruble soon after the war began meant plans for a rupee-ruble mechanism for oil imports were abandoned.
Russian Foreign Minister Sergey Lavrov said that Russia has accumulated billion of rupees in Indian bank accounts but to use this money it needs to be transferred to another currency. The comment comes after it was reported that India and Russia have suspended the negotiation of bilateral trade in rupees. When asked about the suspension of Rupee-Rouble trade talks in a press conference following the SCO Council of Foreign Ministers Meeting, Russian Foreign Minister Sergey Lavrov said.
Citing two government officials, news agencies reported that after months of negotiations India failed to convince Russia to keep rupees in its coffers. An Indian government official had told the news agency that Russia believes that it will end up with an annual rupee surplus of over $40 billion if a rupee settlement mechanism is established due to a high trade gap that favors Russia.
The Kremlin initially encouraged India to trade in national currencies following sanctions on Russian banks and a ban on transactions using the SWIFT messaging system. But volatility in the ruble soon after the war began meant plans for a rupee-ruble mechanism for oil imports were abandoned. India has resisted pressure from the US to scale back relations with Moscow since the invasion of Ukraine.
India began exploring a rupee settlement mechanism with Russia shortly after the invasion of Ukraine last year. However, most trade continues to be conducted in dollars. Although India and Russia have discussed the possibility of facilitating trade in local currencies, no formal guidelines have been established.
India’s imports from Russia have increased from $10.6 billion to $51.3 billion since Russia’s invasion of Ukraine last year. Discounted oil has made up a significant portion of India’s imports, surging twelve-fold during this period. Meanwhile, India’s exports to Russia slightly declined from $3.61 billion to $3.43 billion, the report said.
On the other hand, the two-day SCO Foreign Ministers’ meeting kicked off in Goa on Thursday, with Jaishankar holding several bilateral talks. S Jaishankar met Russian Foreign Minister Sergey Lavrov and both sides agreed to follow a ‘fair multipolar system of interstate relations’, indirectly hinting at the Western economic sanctions in the wake of the Russia-Ukraine war.
(With inputs from agencies)
