(MENAFN) In a call for increased collaboration, Moscow's ambassador to New Delhi, Denis Alipov, has emphasized the need for Indian banks and companies to exert "extra efforts" in maximizing the potential of the rupee-ruble payment settlement mechanism. Addressing the ongoing trade between India and Russia, which has witnessed a substantial surge, reaching an unprecedented level of over USD43.8 billion in the first eight months of 2023, Alipov acknowledged persistent challenges in the payment process that continue to impact trade dynamics.
Despite the significant strides in bilateral trade, payment-related issues remain a hindrance to seamless transactions. Ambassador Alipov urged Indian banks and exporters to proactively address and resolve these challenges to fully harness the benefits of the established payment mechanism involving the national currencies. He underscored the importance of fine-tuning the payment mechanism and expressed confidence that Indian banks are eager to cooperate in overcoming these hurdles.
The rupee-ruble settlement framework was established last year to facilitate transactions between Russia and India, particularly in the face of United States-led sanctions on Russia. These sanctions had disrupted bilateral trade, impacting critical supplies from Russia to India, including defense items such as the S-400 Triumph air defense systems, fertilizers, minerals, and various other goods.
Despite the initial optimism surrounding the rupee-ruble settlement mechanism, Russian and Indian officials have acknowledged that it did not gain the expected traction, primarily due to a trade imbalance. As India increased its oil purchases from Russia, Moscow quickly accumulated a surplus exceeding USD40 billion in special vostro accounts held by Indian banks for their Russian counterparts in the domestic currency.
The call for "extra efforts" from Indian banks and companies highlights the mutual interest in overcoming obstacles to strengthen economic ties between the two nations. As the trade relationship continues to evolve, finding effective solutions to payment challenges will be pivotal in fostering a more robust and sustainable partnership. This collaborative approach not only serves the immediate economic interests of both countries but also contributes to the broader goal of enhancing diplomatic and economic cooperation on the global stage.
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