Despite government efforts, rupee trade has not taken off. The exchange rate mechanism and money repatriation are experiencing teething problems, according to officials from the ministry of trade. According to a representative of the trade ministry, “It hasn’t really taken off, but there are isolated situations where banks have started it.”
India hasn’t, however, formally documented any business dealings with Russian exporters. Another official stated, “Transactions between importers and exporters may be occurring, but until they have been officially registered, we cannot be sure.
All oil purchases from Russia to this point have been paid for in US dollars. One official claims that the majority of the transactions are made via forward contracts, which expire in a few months. The previous contracts, which cannot be terminated midway to begin new contracts in rupees, include current purchases.
In the years from April to December 2022, India’s imports of Russian crude oil increased by 8 times. The government first desired to begin conducting business with Russia in rupees in order to facilitate the procurement of oil from the nation, which was under sanctions as a result of its war operations against Ukraine. One of the officials explains, “But, the international community revised its stance and declared that energy security would be kept out of the sanctions.” Twenty Russian banks have so far launched unique rupee Vostro accounts with Indian institutions.
We initially concentrated on Russia because it was under sanctions, but we have since noticed interest from a number of other nations – everywhere there is a foreign exchange crisis or other issues. We are in talks with a few African and Gulf nations, he said.