The Indian side failed to convince Moscow, which wants to pay in Chinese yuan or other currencies, Reuters wrote.
India and Russia have suspended negotiations to resolve bilateral trade in rupees due to Moscow’s position. Reuters reported this on May 4, citing Indian officials and a source directly familiar with the matter.
“Given the large trade gap in Russia’s favor, Moscow believes it would have an annual surplus of more than $40 billion of rupees if such a mechanism were put in place, and believes that hoarding rupees is ‘not desirable’,” the source said.
It is noted that the rupee is not fully convertible. India also accounts for only 2% of global merchandise exports, and these factors reduce the need for other countries to hold Indian currency.
“India began exploring a rupee settlement mechanism with Russia shortly after Russia’s invasion of Ukraine in February last year, but no deal in rupees has been reported. Most of the trade is in dollars, but others other currencies like the UAE dirham,” the article said.
Both sides have talked about facilitating trade in local currencies, but these agreements are informal. An Indian official who took part in the talks said that Russia was not comfortable holding rupees and wanted to be paid in Chinese yuan or other currencies.
Since Russia’s invasion of Ukraine to April 5, India’s imports from Russia have risen to $51.3 billion, compared to $10.6 billion in the same period last year, according to another Indian official.
Discounted oil forms the bulk of India’s imports, increasing 12-fold over time.
According to the agency, the two countries started looking for alternatives after the rupee settlement mechanism did not work. At the same time, trade with Russia continues despite sanctions and payment problems.
“Today we make some payments in dirhams and some other currencies, but most are still in dollars. The arrangements are made in many ways, and third countries are also used,” said one of officials.
It was earlier reported that India and China in April this year bought most of Russian oil at prices above the price limit of $60 per barrel.
Source: korrespondent
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