India has proposed using rupees held by Russian suppliers in Indian bank accounts to export goods to third countries, according to Dr Ajay Sahai, CEO and Managing Director of the Federation of Indian Export Organisations (FIEO).
"We are discussing with the government whether this money can be used for exports to third countries. For example, a Russian company might place an order, say from Argentina, for rice supply in India, and the money can be transferred [to Indian suppliers] from these accounts," he added.
The third country would then pay Russia for the goods in another currency.
"The idea is that such a scheme helps Indian exports and also helps Russia use the accumulated rupees. It's a win-win option for both sides," Sahai mentioned.
While the exact amount wasn't disclosed, Sahai acknowledged the presence of billions of rupees from Russian exporters in Indian banks, highlighting that trade in Indian rupees with Russia continues, albeit in modest volumes.
This initiative stems from Russian Foreign Minister Sergey Lavrov's announcement last May, citing the accumulation of rupees in Indian banks a challenge under discussion.
In 2023, bilateral trade between Russia and India increased to $65 billion, making Russia India's fourth largest trading partner.
However, this growth has exacerbated trade imbalances, particularly with Russia exporting significantly more than it imports, mainly in energy products.
Apart from Indian rupees, trade settlements between Moscow and New Delhi involve US dollars, UAE dirhams, and Chinese yuan.