India-Russia negotiations to procure oil under Rupee-Ruble mechanism underway: Sources

Amid ongoing war between Russia and Ukraine, sources from Finance Ministry of India say that Indian government will hold discussions with Kremlin on utilising Rupee and Ruble mechanism as New Delhi looks to procure cheap oil from Russia. aforementioned discussion will be important as it will be deciding factor as government looks to increase oil imports from Russia. It is to be ted that re is also an ongoing negotiation between  Indian and Russian governments over cheap oil imports. 

It is pertinent to mention here that India is one of biggest buyers of Russian oil especially after Kremlin started a war against Ukraine, which forced western nations to impose a ban on oil imports from Russia. Time and again, Indian officials have me it clear that New Delhi will look after its interest and continue to buy oil from Russia if offered at right price. A few weeks ago, India's Petroleum Minister Hardeep Singh Puri ded, "We’ve energy relations with Russia, we buy crude from m but our total imports are t more than 0.2 per cent, we’re open to buying if terms are right, we’ve to look after our interests.”

Rupee-Ruble mechanism

Putin's regime was cut off from key international currency markets at start of Russia-led war on Ukraine, owing to ongoing sanctions that isolated Moscow. As a result, payment mechanisms in local currencies have emerged as a feasible option for increasing bilateral tre.

Rupee-Ruble system was actively studied by Indian government as a contingency plan for conducting business with its important partner. specialised payment mechanism would allow India to carry out existing commercial agreements with Russia while avoiding severe charges imposed by West and tring in US dollars.

Reserve Bank of India (RBI) allegedly met with executives from three Russian financial institutions, including VTB, Sberbank, and Gazprombank, in March to discuss prospective Rupee-Ruble agreement, indicating significant progress.

Rupee-Ruble arrangement was first conceived in 1953 under Indo-Soviet accord as an alternative to collecting dues and making payments in Dollars or Euros.

Im: AP, PIB