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Tuesday, September 19, 2023

India to offer Russia option to use trapped rupees – Moscow

New Delhi and Moscow will identify “promising areas” where billions of rupees stuck in Indian bank accounts can be invested

Russian Foreign Minister Sergey Lavrov announced on Sunday that India plans to propose various investment options for the “billions of rupees” that Russia has amassed from its exports. Lavrov made the announcement at a press conference in New Delhi following the G20 summit hosted by India.

Moscow and New Delhi are constantly in touch with each other on the bilateral matter, including the payment issues, the minister told the media.

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“I have recently met with my counterpart, S Jaishankar, and discussed bilateral issues, including the issue of trade settlement. In the current situation, Russia has billions of rupees accumulated in the accounts of Indian banks, and we are discussing how they can be used. And our Indian friends have conveyed they will suggest the promising areas where these funds can be used as investments,” Lavrov said.

The minister added that other bilateral agreements, including in the defense sector, are progressing as planned despite difficulties with payments caused by the sanctions imposed by the US and its allies.

Earlier, Indian media reported that payment issues have impacted major defense deals between Moscow and New Delhi, including the delivery of the remaining S-400 Triumf air defense systems to India. Russian defense officials and diplomats have dismissed the rumors, saying the deals and deliveries remain on track.

Although India and Russia initially agreed to settle their trade transactions in rupees after establishing the framework, the system failed to gain traction as anticipated. Moscow quickly amassed a surplus of billions of rupees due to New Delhi’s substantial oil purchases.

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Over the past year, Russia has become a leading oil supplier to India. The two countries have increasingly settled a larger portion of their trade deals in their respective national currencies, while also redirecting shipments towards the east. However, as imports from India remain stagnant, over $40 billion rupees have accumulated in special vostro accounts which Indian banks hold for Russian banks in the domestic currency. Russian companies have been unable to repatriate these rupees due to local currency restrictions.