Russia has offered India a dual-payment mechanism to allow more trade in local currencies as pressure mounts on the sanction-hit nation over its war in Ukraine, according to people with knowledge of the matter.

The latest offer from Moscow involves payment for Indian oil imports from Russia in dollar or euro while the rest of the trade will be settled using a rupee-ruble-denominated mechanism,  the people said, asking not to be identified citing rules on speaking to the media.

Russian central bank officials along with representatives of Sberbank of Russia PJSC discussed the proposals with their Indian counterparts and also with officials at the finance ministry last week, the people said. No final decision has been taken yet.

India’s finance ministry and the central bank didn’t immediately respond to emails seeking comment.

India is among the major economies that have continued trade with Russia since the invasion of Ukraine, despite Western nations seeking a scale back in the relationship with Moscow. Prime Minister Narendra Modi’s government wants to continue bilateral trade due to its dependency on Russian weapons needed to counter China’s growing military assertiveness and avail cheaper oil to ease the burden of a global surge in prices.

Russia has been pushing India for rupee-ruble payments using its messaging system SPFS since sanctions were announced on Russian banks and the ban on transactions from the SWIFT system.

Latest data show India has a trade deficit of $5.5 billion with Russia, which includes more than $3 billion imports of oil and petroleum products. India further wants to boost shipments to Russia by an additional $2 billion to narrow the trade imbalance.

Source:
courtesy of BLOOMBERG

by Shruti Srivastava and Debjit Chakraborty

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