The central government is considering options to set up a rupee payment mechanism with Russia to bypass the western sanctions imposed on Moscow.
This move stems from concerns regarding the Russian supplies of fertilisers to India amid intensifying sanctions on Russia in the wake of their ongoing conflict with Ukraine.
Concerned officials explained that the plan is to ensure that Russian banks and companies open accounts with some state-run Indian banks for a trade settlement.
Funds in these accounts will be a guarantee of payment for the trade exchanged between India and Russia. Meanwhile, the two parties will barter commodities to offset the amount.
“This is a proactive move assuming that the conflict escalates and there could be a slew of sanctions in place,” a source in the know of developments told news agency Reuters.
It added, “In this case we would not be able to settle the transaction in dollars and so an arrangement has been proposed to set up a rupee account, which is being considered.”
India has reportedly used such a mechanism for trades with Iran after the middle-eastern country came under Western sanctions for its nuclear weapons program.
The discussions with Russia on this issue are still at a preliminary stage.
