As India and Russia discuss FTA, the elephant in the room is rupee trade

Finding alternative paths to buy oil from states under Western sanctions is stretching the government and RBI's creativity

Subhomoy Bhattacharjee New Delhi
Rupee trade

Even as India and Russia discuss a free trade agreement to deepen bilateral ties, the elephant in the room is the rupee trade. This is an issue to which not just Moscow but Iran, the other partner under Western sanctions, is also seeking answers.
In the context of the new trade architecture developing in the world to bypass the US dollar, bankers and traders with whom this correspondent spoke said the most difficult aspect of taking bilateral trade out of the multilateral system of mostly dollar-denominated trade is that the rules change with each country. “Sanctions are not the problem as much as how countries are unwilling to give up their advantage,” said one trader who deals with both Iran and Russia. New Delhi has limited rupee trade with some countries but these are small and preliminary deals with countries with which India runs trade surpluses.
For instance, forex-strapped Iran has agreed to treat the Indian rupee as a reser

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First Published: Apr 18 2023 | 5:03 PM IST

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