Russia has proposed a plan to India wherein the latter will pay for Russian oil in US dollars or euro while using a rupee-rouble-denominated mechanism for other goods, Russian news media have cited sources from the Kremlin as saying.
The new mechanism is designed to permit more trade in local currencies as economic pressure mounts on Russia over its military operation in neighbouring Ukraine, according to people with knowledge of the matter quoted by Bloomberg.
The Russian central bank officials and their Indian counterparts discussed the mechanism in the presence of officials from the finance ministries of the two countries.
Indian External Affairs Ministry spokesperson Arindam Bagchi confirmed today that an inter-ministerial group was looking at resolving issues relating to payment mechanisms with Moscow in order to stabilise the country’s economic engagement with Russia.
“Our objective has been to see how (we) can stabilise the economic transactions or economic engagement that we are doing with Russia in the current context,” Bagchi said.
India is among a number of major economies that have kept trading with Russia since the launch of the operation despite mounting pressure on New Delhi from Western nations to scale back its economic and military ties with Moscow. New Delhi, saying that it wants an end to the Russia-Ukraine war, has not publicly the Russian invasion so far.
India’s imports from Russia rose to $ 8.69 billion in the first 11 months of the 2021-22 financial year, which is 58% higher than the total imports of $ 5.48 billion recorded in the full financial year 2020-21, the Indian government reported earlier this month. Meanwhile, exports to Russia rose to $ 3.18 billion in the period from April to February 2021-22 from $ 2.65 billion.
MEA confirms Indian efforts to stabilise Russia
“There is a possibility that these sanctions might impact us and that is why we are having the interministerial discussions and other conversations to see how we can keep our economic interactions with Russia stabilised and also to see how we can ensure our interests are not affected,” the MEA spokesman had said on 28 April.
The MEA spokesperson was asked whether India would feel the impact of the Western sanctions against Moscow. “To say that it will not happen, it is very difficult to say,” he said.
Asked whether India is looking at paying Russia in roubles for its imports, Bagchi did not give a direct reply. “I do not think that is related in any way with the issue of whether Europeans are paying in roubles or not. We can pay in whatever currency that we work out. There are of course constraints. I know there are sanctions by some countries and that kind of issue,” he said.
When asked whether India is buying more crude oil from Russia using the Rupee-Rouble payment mechanism, the spokesman said the oil purchasers will have a better idea of it. “The government’s perspective is that the inter-ministerial group headed by the finance ministry is looking at how we can resolve this issue of payment mechanisms,” he said.
Responding to a question on whether the Ukraine issue will figure during Prime Minister Narendra Modi’s upcoming visit to Germany, Denmark and France, Bagchi said: “Naturally topical issues do get discussed.”
However, he said that there is a lot more to discuss during the visit than this issue. Modi will embark on a three-day visit to Germany, Denmark and France from 2 May.
To a specific question on whether India could be part of the peace initiative in Ukraine, Bagchi said New Delhi has not received any particular request from either Ukraine or Russia for it.