By Nidhi Verma
NEW DELHI, May 15 (Reuters) - India and Russia have been
settling some of their non-oil trade in rupees since the
beginning of this year, said a top official at state-run Indian
lender UCO Bank , which is involved in the
transactions.
Last year, the Reserve Bank of India announced a mechanism
to settle foreign trade in rupees, aimed at internationalising
its use.
Russia is also keen to do more trade in "national currencies
and currencies of friendly countries," its Deputy Prime Minister
Denis Manturov said in April, to reduce its reliance on U.S.
dollars after Western sanctions over its war in Ukraine.
So far, Russia's Gazprombank is the only foreign
bank that has opened a special rupee vostro account with UCO
Bank, UCO Chief Executive Soma Shankara Prasad told Reuters.
Prasad said UCO had received requests from other foreign
banks, including some from Russia, to open special rupee vostro
accounts.
"About 19-20 transactions have happened (in rupees) since
January ... All these transactions have been Indian exports to
Russia," he said.
Prasad said Russia was paying Indian exporters in rupees
from payments received in Gazprombank's rupee vostro account for
a "couple" of transactions with Indian importers, including the
purchase of pollution measuring equipment by an Indian buyer.
"We are happy that two-way trade in rupee has started. It is
at a very early, nascent stage and we hope that this is going to
pick up", he said, adding if both sides want, oil trade could be
brought under the rupee mechanism after it is fully established
and tested.
The arrangement mirrors the mechanism India adopted to
settle trade with Iran, where its oil payments to Tehran in
rupees were used to supply non-sanctioned goods to the Islamic
nation. UCO Bank was also involved in settling that trade.
Both Gazprombank and Russia's Trade and Industry Ministry
did not immediately reply to requests for comment.
Earlier this month, Reuters reported that India and Russia
had suspended negotiations to settle trade in rupees as the
trade balance was tilted in favour of Moscow due to surging
Russian oil imports by New Delhi.
India's annual trade with Russia more than tripled to $44.4
billion in the fiscal year to March 31, from $13.1 billion the
year before.
Russia overtook Iraq for the first time as the top oil
supplier to India in 2022/23, data obtained from trade sources
showed.
To fix this trade imbalance Russia wants to expand supplies
from India, such as machinery imports, components and equipment
for road construction, chemicals and pharmaceuticals, Russia's
Manturov said in April.
Manturov also said the countries were in talks for a free
trade agreement and a bilateral investment agreement.
Sergei Lavrov, Russia's Foreign Minister, said earlier this
month that talks were underway with India to exchange billions
of rupees that have accumulated in Indian banks for other
currencies.
(Reporting by Nidhi Verma; Editing by Tony Munroe and Mark
Potter)
Messaging: nidhi.verma.thomsonreuters.com@reuters.net))
