Russian Foreign Minister Sergey Lavrov on Friday said that Russia has accumulated billion of rupees in Indian bank accounts but to use this money it needs to be transferred to another currency and this is being discussed now. The comment comes after it was reported that India and Russia have suspended the negotiation of bilateral trade in rupees.
When asked about the suspension of Rupee-Rouble trade talks in a press conference following the SCO Council of Foreign Ministers Meeting, Russian Foreign Minister Sergey Lavrov said, "As for the rupees, this a problem. Because we accumulated billion of rupees in Indian bank accounts. We need to use this money, but to use this money it needs to be transferred to another currency and this is being discussed now."
Citing two government officials, Reuters on Thursday reported that after months of negotiations India failed to convince Russia to keep rupees in its coffers. An Indian government official had told the news agency that Russia believes that it will end up with an annual rupee surplus of over $40 billion if a rupee settlement mechanism is established due to a high trade gap that favors Russia.
The report said that Russia views Rupee accumulation as "not desirable."
However, a Russian official denied the report saying, "No change in bilateral developments, wishful thinking by Western news agencies," according to ANI.
India began exploring a rupee settlement mechanism with Russia shortly after the invasion of Ukraine in February of last year. However, most trade continues to be conducted in dollars. Although India and Russia have discussed the possibility of facilitating trade in local currencies, no formal guidelines have been established.
India's imports from Russia have increased from $10.6 billion to $51.3 billion since Russia's invasion of Ukraine in February of last year. Discounted oil has made up a significant portion of India's imports, surging twelve-fold during this period. Meanwhile, India's exports to Russia slightly declined from $3.61 billion to $3.43 billion, the report said.
On the other hand, The two-day SCO Foreign Ministers' meeting kicked off in Goa on Thursday, with Jaishankar holding several bilateral talks. S Jaishankar met Russian Foreign Minister Sergey Lavrov and both sides agreed to follow a 'fair multipolar system of interstate relations', indirectly hinting at the western economic sanctions in the wake of the Russia-Ukraine war.