What is the status of India’s plans to introduce Rouble trade and rupee payments for its trade with Russia?

With the latest SWIFT ban imposed on Russian businesses, most of the Indian banks have stopped honouring export obligations to Russia in other currencies. This has put exporters to Russia in a spot with outstanding receivables of over $500 million stuck at various stages. To overcome this challenge, the government of India is considering allowing India-Russia trade in local currencies i.e. denominating the trade in rupee and the Rouble.

The leeway will be given initially in sectors such agriculture, pharma and energy, where sanctions have not yet been imposed by the US and its allies. Currently, banks are working out how to facilitate trade in critical sectors like defence. India may have to tread a little carefully on this front as it could send a signal to the West that India was bypassing the sanctions. That would be the challenge, if India went beyond the permitted sectors.