Russia plans to offer India dual payment plan for buying oil

Russia plans to offer India a dual-payment method to facilitate more transactions in local currencies as pressure rises on the sanctioned country over its war in Ukraine.

This was disclosed by persons familiar with the situation to Bloomberg, stating that  Moscow would accept payment in dollars or euros for Indian oil imports from Russia, while the remainder of the trade will be settled in rupees and rubles.

Russian central bank officials and representatives from Sberbank of Russia PJSC met with their Indian counterparts as well as officials from India’s finance ministry to discuss the recommendations, according to the persons. There is yet to be a final decision.

Due to its reliance on Russian arms to fight China’s growing military assertiveness, Prime Minister Narendra Modi’s government would be prudent to keep bilateral trade going. India has the precepts of getting cheaper oil to help lessen the burden of a worldwide price spike.

What you should know

  • Russian President, Vladimir Putin enacted a law requiring international gas buyers to pay in ruble or face having their supplies shut off.
  • As a result, Russia’s Gazprom PJSC stated it has blocked gas deliveries to Poland and Bulgaria, and it will continue to do so until the two nations comply with Moscow’s demand that they pay for the critical fuel in rubles.
  • Uniper, a German-based said that it would be transferring payments for Russian gas to a Russian bank and no longer to a Europe-based bank. This is in conflict with the EU stance, as Ursula von der Leyen has cautioned corporations not to give in to Russia’s requests to pay for gas in rubles.
  • Despite Western nations’ efforts to sever ties with Moscow following the invasion of Ukraine, India is one of the main economies that has continued to trade with Russia.
  • Since the announcement of sanctions against Russian banks and a block on transactions through the SWIFT system, Russia has been pressuring India to use its messaging system SPFS to make rupee-ruble payments.
  • India has a $5.5 billion trade deficit with Russia, which includes more than $3 billion in oil and petroleum product imports. To reduce the trade imbalance, India plans to increase shipments to Russia by an additional $2 billion, according to Bloomberg.

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