India will soon start settling trade with Russia in rupees as the State Bank of India has agreed to facilitate the process, the president of India’s exporter group, Federation of Indian Export Organisations (FIEO), A Shaktivel told reporters.
The trade body’s president’s remarks come a couple of months after the Reserve Bank of India (RBI) announced a mechanism to settle payments for international trade in rupees, especially for India’s exports.
“The exporters are very much encouraged by the RBI Notification allowing exports-imports in Indian Rupee. This will help us to increase our exports to countries facing acute foreign exchange shortage or those covered by sanctions,” the trade body said in a statement.
Reports say India’s exports to Russia during the first four months of this financial year fell by about a third while imports continued to rise, especially on account of ramping up of inbound crude oil shipments.
According to an estimate, there is a steep jump in Russian oil export to India, as it has increased ten times this year and Russian crude oil is now fulfilling almost ten per cent of India’s imported oil consumption.
Against that backdrop, it is widely believed if the mechanism fructifies then it may go a long way in internationalizing the Indian currency rupee in the long run.
SBI Research in a report recently said an interesting development is taking place in the global currency market as there has been a significant jump in trade in oil and other commodities in currencies such as the Renminbi, Hong Kong Dollar, and Arab Emirates Dirham.
“Dollar Distancing is finally happening and it is time for India to pitch Rupee as a credible, secular alternative in the changing world order?” SBI Research asked in the same report.
Coming to the share of the US dollar in global foreign exchange reserves, it has been shrinking since the start of the twenty-first century, falling close to 59 per cent as of the end of December 2021, from above 70 per cent two decades back, SBI Research had said.