India and Russia have doubled rupee-rouble payments in 2024, says largest Russian bank

India and Russia boost rupee-rouble payments despite U.S. sanctions, aiming to reach $100 billion trade target by 2030.

India and Russia have doubled their payments in national currencies (rupee-rouble) since last year despite sanctions by the U.S. and European Union, said Russia’s largest, state-controlled bank Sberbank that handles a majority of payments for Indian exports to Russia.

The surge may rise further after Prime Minister Narendra Modi’s visit to Moscow last week, economists and Indian businessmen working in Russia hope, warning that in the absence of the Indian rupee, Chinese businesses and the yuan would continue to benefit from the “vacuum” created by the exit of Western companies.

“We are witnessing an increase in trust towards the rupee from our clients. Today, not only have rupee-denominated current accounts become a reality, but also rupee deposits, which businesses are showing great interest in. Since the beginning of the year, the volume of corporate deposits in rupees has increased sixfold,” a Sberbank spokesperson told The Hindu in response to queries about potential growth areas, adding that the rupee is now “easily convertible” in Russia, and that Sberbank hopes to serve as a “Sherpa” for more businesses given the $100 billion trade target by 2030 set by Mr. Modi and Russian President Vladimir Putin during talks.

The trade target is likely to be reached sooner than 2030 as bilateral trade in 2023-24 was already around $65 billion, with $60 billion just Russian exports to India, mainly in energy. In addition, a “Joint Leaders’ Statement on the development of strategic areas of Russia-India economic cooperation for the period up to 2030” issued on enhancing economic cooperation, aims to tackle nine specific areas to ease and facilitate trade, investment and remittances between the two countries. The statement also refers to the conclusion of a free trade agreement with the Eurasian Economic Union (EAEU), including Russia, Belarus, Armenia, Kazakhstan and Kyrgyzstan at the earliest.

“Prime Minister Modi’s journey to Moscow was very important because it was the first visit at a time when economic cooperation between the two countries has come to a qualitatively new level,” said Lydia Kulik, Head of India Studies at the SKOLKOVO Institute for Emerging Market Studies, at Moscow School of Management. “Secure payment mechanisms, insurance and logistics are among the most important areas to focus on,” she added, listing auto and aviation components, chemicals, microelectronics, consumer electronics, machinery, medical devices and agricultural products as sectors in which Indian companies should consider exporting to Russia. This would also make things easier for tourists and students in Russia, who presently have to carry currency as the SWIFT payment ban means Mastercard and Visa cards don’t work.

According to a growing number of Indian businessmen now based in Russia, particularly in metallurgical and pharmaceutical sectors, the government must move quickly as China has taken more advantage of the sanctions to fill the space vacated by nearly all Western brands, and already has bilateral trade of $240 billion, which is more evenly balanced. At present, even Indian companies are being forced to consider payments in the Chinese yuan, they say.

“I think sanctions have created new opportunities, and China has gained a lot compared to India. Of course, the Indian government has been very positive about [trade with Russia], but somehow they have not achieved the same scale as China,” explained Sukrit Sharan, a St. Petersburg-based board member of a joint venture between International Institute for Advanced Aerospace Technologies (IIAAT) and Indian firm Millennium Aerodynamics that produces “hybrid aeroboats”.