Roubles for fuel, defence deals with Russia
- The last two weeks saw a flurry of visits by senior officials from the West to convince India not to undermine sanctions on Russia by opting for payments in national currencies as also not to increase purchase of discounted oil from Russia.
- Recently the Russian Foreign Minister came to India making it the first high-level visit since the Russian invasion of Ukraine.
- The Ministry of External Affairs of India said that the two leaders discussed India’s concerns over the impact of the Ukraine crisis on its economy and said that it is critical to ensure that the economic and technological contacts remain “stable and predictable”.
- India and Russia have been working on streamlining payments through the rupee-rouble mechanism bypassing the SWIFT system and the dollar route.
- Meanwhile, the U.S. said that there will be “consequences” for any country, including India, that conduct local currency transactions with Russia’s central bank against its sanctions.
Developments in India-Russia Relations
- Russia is intensifying the use of national currencies against the dollar payments with India and China.
- India has imported about 13 million barrels of Russian oil since the start of the Ukraine war in February.
- This is a significant move as India had imported only about 16 million barrels of Russian oil in all of 2021.
- India and Russia are further looking at ways to bypass the sanctions imposed by the U.S. and other European Countries and the leaders of both countries feel the measures will also be extended to the area of military and technical cooperation.
- Officials from Russia’s central bank met the officials of the Reserve Bank of India to identify and resolve issues in trade that have arised due to Western sanctions
- The Indian government has set up a multi-ministerial group which is led by the Finance Ministry to formulate plans to tackle challenges in trade with Russia, including managing payments for exporters and importers.
- The Defence Ministry has assessed and monitored the impacts of the sanctions on the deliveries and supplies from Russia.
- Experts opine that only some shipping delays were possible, there would not be any impact on the forces’ preparedness along the borders.
- The forces have made crucial emergency procurements in the last two years since the standoff in eastern Ladakh and have stocked up defence equipment. So, there won’t be any shortages of equipment.
- Even in the past, both the countries in the $5.43 billion deal for S-400 air defence systems had agreed for the payments through the rupee-rouble exchange, in the background of the U.S.’s CAATSA sanctions.
- Also, many other deals are in the pipeline such as the procurement of 12 Su-30MKI aircraft and 21 MiG-29 fighter jets for the Indian Air Force.
Prelims Take Away
- India Russia Defence deals
- India Russia Trade
- Major grouping having India and Russia