A new payment mechanism has been given the green light to boost Indian exports.
India will soon launch trade in rupees with Russia, the head of the Federation of Indian Export Organizations (FIEO) said this week. This comes after the State Bank of India agreed to simplify a new payment mechanism.
“The State Bank of India has come forward for facilitating trade in rupees with Russia and some other banks have also shown interest,” A. Shaktivel told reporters, adding that India already has “a good rupee payment mechanism in Iran, so the same thing will happen [with Russia].”
In July, the Reserve Bank of India, the country’s central bank, issued a circular urging national lenders to introduce additional arrangements for import and export transactions in rupees. The move designed to reduce the rupees’ dependence on the dollar, is also seen as an incentive to boost trade with Moscow.
India’s exports to Russia slumped by about a third in April-July due to sweeping Western sanctions imposed on Moscow.
But according to A. Shaktivel, “The trade in rupees could boost Indian exports to Russia to about $5 billion in the current financial year,” he said.
To avoid Western sanctions Indian companies are already switching to Asian currencies in transactions with Russia.
Moscow is expected to name the bank for mutual settlements in rupees within two weeks. Meanwhile, the Moscow stock exchange is working on a plan to launch trade in the Indian currency in an effort to move away from the US dollar and euro.
