A system allowing direct rupee-ruble payments in trade between Russia and India could be launched this week, the president of the Federation of Indian Export Organizations (FIEO), A Sakthivel, told CNBC on Wednesday. The arrangement would allow India and Russia to carry out financial operations bypassing the US dollar. Russia is effectively blocked from using US currency due to Western sanctions over the conflict in Ukraine.
According to the official, the Indian government is working on a proposal to allow up to five nationalized Indian banks to be engaged in the rupee-ruble trade mechanism, and discussions between the central bank governor, the finance minister, and the banks on the matter have already been held. The arrangement would let Indian exporters continue doing business with Russia despite sanctions banning, among other things, international payment mechanisms in the country, such as SWIFT. It would also let India continue buying Russian energy exports and other goods.
According to Sakthivel, the Indian economy could profit from sanctions Russia is facing, as they give Indian exporters an opportunity to expand on the Russian market.