The Indian government is considering a Russian proposal to use a system developed by Russia’s central bank for bilateral settlements as Delhi wants to buy oil and arms from a Russian Federation hit by Western sanctions, Bloomberg reported.
The plan includes payments in rupees and rubles, which will be made through the Russian messaging system SPFS, the sources said on condition of anonymity. A final decision has yet to be made and the issue is likely to be discussed when Russian Foreign Minister Sergei Lavrov arrives in India for a two-day visit on Thursday.
India is interested in continuing bilateral trade because of its reliance on Russian weapons and the prospect of buying cheaper oil amid skyrocketing global prices. Prime Minister Narendra Modi’s government is fending off Western pressure by arguing that arms purchases from Russia are necessary to counter China’s rising military prestige.
According to the proposal, the rubles would be deposited in an Indian bank and converted into rupees, and the same system would work in reverse. It is not yet clear whether the exchange rate will be fixed or floating.