India’s exports to Russia took a hit after the West imposed sanctions on Moscow for its late-February military offensive against Ukraine. In April-July, India’s exports to Russia dropped by about a third, while imports leapt as refiners raced to buy discounted Russian oil, as per official data.
“State Bank of India has come forward for facilitating trade in rupees with Russia and some other banks have also shown interest,” A. Shaktivel said.
The name of the corresponding Russian bank could be announced in the next 15 days, he said.
In July, Reserve Bank of India unveiled a mechanism to settle international trade in rupees to counter impact of the depreciation of global currencies.
The move was seen as aiming to promote trade with Russia, as the country used a similar mechanism to settle payments with Iran, which has also faced sanctions by the West.
Indian firms are already swapping out dollars and euros for Asian currencies to settle trades with Russia to avoid sanctions.
The FIEO President said that the government is also likely to extend export incentives under the new mechanism to boost exports to Russia and increase the acceptability of the domestic currency.
The most likely incentive that will be granted would apply a current program for trades using fully convertible currencies such as the dollar and the euro to the rupee, which is only partially convertible.
Russian President Vladimir Putin and Indian Prime Minister Narendra Modi are likely to meet on Friday on the sidelines of Shanghai Cooperation Organisation summit in Uzbekistan to discuss issues including boosting trade.
“The trade in rupees could boost Indian exports to Russia to about $5 billion in the current financial year,” the FIEO President said. That would be up from about $3.3 billion last fiscal year.
(With input from Reuters)