NEW DELHI:
India will soon start trading with Russia in rupees as the main lender State Bank of India has approved the new mechanism, the president of the Indian exporters group said on Wednesday.
India’s exports to Russia have slowed since Western sanctions were imposed on Moscow following the invasion of Ukraine in late February.
“State Bank of India has come forward to facilitate trade in rupees with Russia and some other banks have also expressed interest,” said A. Shaktvel, chairman of the Federation of Indian Export Organizations (FIEO), a body founded by the Commerce Department to promote exports, told reporters.
He said the name of the corresponding Russian bank could be announced in the next 15 days.
The Reserve Bank of India introduced a mechanism in July to settle international rupee trade to avert the impact of the depreciation of global currencies.
The move was seen as aiding trade with sanctions-affected Russia, as a similar mechanism was previously used for instituting payments with Iran, which has also faced sanctions.
In April-July, the first four months of this fiscal year, India’s exports to Russia fell by about a third, while imports jumped as refineries rushed to buy Russian oil at a discount, according to government data.
Indian companies are already exchanging dollars and euros for Asian currencies to transact transactions to avoid Western sanctions against Russia.
Shaktvel said the government could expand export incentives under the rupee trade mechanism to boost shipments to Russia and increase the acceptability of the domestic currency.
The most likely incentive to be awarded is the application of a current program for transactions with fully convertible currencies such as the dollar and euro to the rupee, which is only partially convertible, Reuters reported last month.
Russian President Vladimir Putin and Indian Prime Minister Narendra Modi meet Friday in Uzbekistan on the sidelines of a summit of the Shanghai Cooperation Organization, a regional security bloc, to discuss matters including boosting trade.
“Rupee trade could push Indian exports to Russia to about $5 billion in the current fiscal year,” Shaktivel said. That would be an increase from about $3.3 billion last fiscal year.
Separately, Ajay Sahai, director-general of the FIEO, said India’s total goods exports could rise about 11% this fiscal year to more than $470 billion.
(This story was not edited by DailyExpertNews staff and was generated automatically from a syndicated feed.)