The Indian government is considering a proposal from Russia to use a different system developed by the central bank of the latter to make bilateral payments in response to the harsh sanctions that have been slapped on Moscow by the West due to the invasion of Ukraine.
The plan, according to those with knowledge regarding the matter who spoke to the South China Morning Post, is to use a rupee-rouble-denominated payment with Russia’s messaging system SPFS (the Russian equivalent of the SWIFT financial transfer system).
These are confidential deliberations, and those talking to the SCMP requested that they remain anonymous.
For the rupee-rouble mechanism to work, importers in India would have to pay for goods to Russian banks in India who would pay Russian exporters in roubles.
But since India imports more than it exports from Russia, Russian banks will have to do something about the huge stockpile of rupees.
For this, India needs to export more, that is, by opening up the market for agricultural machinery, medicine, and other goods.
A final decision is yet to be taken and discussions regarding that will take place during Russian Foreign Minister Sergey Lavrov's two-day trip to India starting on 31 March.
His visit will coincide with British foreign secretary Liz Truss's trip to India and US Deputy National Security Advisor for International Economics Daleep Singh's trip as well.
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