Around 90% of trade between India and Russia is now being conducted using local or alternate currencies while the remaining still happens in other freely convertible ones, Russian Deputy Prime Minister Denis Manturov said Tuesday.
“Share of local and alternative currencies keeps growing in bilateral trade. It is now approaching 90%. We deem it necessary to continue our work on expanding correspondent relations between Russian and Indian banks,” he said in his opening remarks at the 25th Session of the India-Russia Intergovernmental Commission on Trade, Economic, Scientific, TEchnical and cultural cooperation here.
India took the first step towards enabling trade settlement in local currency when the Reserve Bank of India (RBI) in July 2022 permitted the invoicing and payment of international trade transactions in rupees. This move followed the start of the Ukraine war and shutting out of Russia from international payments and settlement systems.
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Around 20 Authorised Dealer (AD) banks in India have been permitted to open 92 Special Rupee Vostro Accounts of partner banks from over 22 countries to facilitate this trade.
Other countries whose banks have opened rupee accounts with correspondent banks in India are Bangladesh, Belarus, Botswana, Fiji, Guyana, Israel, Kazakhstan, Kenya, Malaysia, Maldives, Mauritius, Myanmar, New Zealand, Oman, Seychelles, Sri Lanka, Tanzania and Uganda.
The Russian deputy minister and India’s External Affairs Minister S Jaishankar also talked of diversifying the bilateral trade which is dominated by petroleum, coal and fertilisers and making progress on the proposed free trade agreement between India and the Eurasian Economic Union (EEU). The EEU has Russia, Belarus, Kazakhstan and Armenia as members. There has been one round of talks on the agreement already.
Apart from the FTA, both countries are also looking at a bilateral agreement on services and investments. India runs a huge trade deficit with Russia — in 2023-24, trade between the two countries touched $65 billion,
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