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India explores setting up rupee trade accounts with Russia to soften sanctions blow – Times of India

MUMBAI: India is exploring methods to set up a rupee cost mechanism for trade with Russia to soften the blow on New Delhi of Western sanctions imposed on Russia after its invasion of Ukraine, authorities and banking sources stated.
Indian officers are involved that important provides of fertilizer from Russia might be disrupted as sanctions intensify, threatening India’s huge farm sector.
India has known as for an finish to violence in Ukraine however shunned outright condemnation of Russia, with which it has lengthy-standing political and safety ties.
Russia invaded Ukraine by land, air and sea on Thursday within the greatest assault on a European state since World War Two, prompting tens of hundreds of folks to flee their houses.
Russian forces pressed their advance on Friday and Ukrainian President Volodymyr Zelenskiy pleaded with the worldwide group to do extra, saying sanctions introduced thus far weren’t sufficient.
Officials stated the plan was to get Russian banks and firms to open accounts with a number of state-run banks in India for trade settlement, a banking supply concerned within the discussions stated.
“This is a proactive move assuming that the conflict escalates and there could be a slew of sanctions in place,” the supply stated.
“In this case we would not be able to settle the transaction in dollars and so an arrangement has been proposed to set up a rupee account, which is being considered.”
Funds in such accounts act as a assure of cost for trade exchanged between two nations, whereas the events barter commodities from one another to offset the sum, the supply stated.
An identical association, through which half of the settlement with Russia is in international foreign money and relaxation is thru native rupee accounts, was additionally being explored, stated the banking and the federal government supply.
Such mechanisms are sometimes utilized by nations to protect themselves from the blow of sanctions and India additionally used it with Iran after it got here beneath Western sanctions for its nuclear weapons programme, the supply stated.
The programme was launched in 2012 and labored properly for a number of years.
The discussions on Russia had been nonetheless at an early stage and formal talks had not but begun between the 2 sides, an Indian authorities official stated.
EU leaders agreed on Thursday to impose new financial sanctions on Russia, becoming a member of the United States and Britain in attempting to punish Russian President Vladimir Putin and his allies for the assault.
The sanctions impede Russia’s means to do enterprise in main currencies and goal particular person banks and state-owned enterprises.
The finance ministry didn’t instantly reply to a request searching for remark. None of the sources needed to be recognized because the discussions are personal.
Russia’s exports to India stood at $6.9 billion in 2021, primarily mineral oils, fertilisers and tough diamonds, whereas India exported $3.33 billion value of items to Russia in 2021, primarily pharmaceutical merchandise, tea and occasional.
Russia and Belarus often account for almost a 3rd of India’s whole potash imports. It wouldn’t be possible to change them amid a rally in fertilizer costs to a file excessive, a senior business official advised Reuters.
New Delhi can be holding a gathering with fertilizer business officers on Friday to discover methods to safe provides from Russia and Belarus, stated a senior fertilizer business official, who declined to be recognized.

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