Saturday, June 25, 2022

India exploring Rupee-Rouble payment for fuel import amid sanction: Sources

India is exploring a Rupee-Rouble payment mechanism for the import of oil from Russia in view of the sanctions imposed by the US and Europe

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New Delhi: The government is exploring a Rupee-Rouble payment mechanism for the import of oil from Russia in view of the sanctions imposed by the US and European countries following Moscow’s attack on Ukraine.

With sanctions imposed on Russia, the scope of a payment mechanism in local currencies has expanded from being a means to sustain ongoing trade to possibilities of deeper engagement, including increasing bilateral trade.

“We have heard rouble payment being done by Europe. India had a rupee-rouble payment structure earlier. I don’t think we have arrived at any decision as yet. Some discussions are happening,” sources said.

Any such payment mechanism involving rupee and rouble payments for imports and exports would help circumvent the sweeping economic sanctions imposed on Russia by the western nations, including freezing many key Kremlin officials’ individual accounts and snapping Russian banks from the international payment gateway SWIFT.

“We have a mechanism already. We have to see if the existing system is workable in the current global situation. We are exploring that and some more related things,” sources said.

Asked if India can increase its dependence on Russia for oil needs if Moscow provides lower than the international prevailing rate, sources said, it is subject to some payment mechanism being worked out.

India’s main imports from Russia include fuels, mineral oils, pearls, precious or semi-precious stones, nuclear reactors, boilers, machinery and mechanical appliances, electrical machinery and equipment, and fertilisers.

Major export items from India to Russia include pharmaceutical products, electrical machinery and equipment, organic chemicals and vehicles.

In the past too, India had devised a mechanism to pay for imports from Iran when sanctions were imposed on the Persian Gulf nation.

India had entered into an agreement with Iran for carrying out trade-related transactions through a rupee account maintained with a state-owned lender.

As per the mechanism, Indian importers deposited payments in rupee in the ‘Vostro’ account of Iranian banks, maintained with the Indian state-owned lender UCO Bank for imports including crude oil.

The account was also used to make payments to Indian exporters for sending goods to Iran and the payments were settled on a daily basis.

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