Russian Foreign Minister Sergei Lavrov has said that Russia has accumulated billions of rupees in Indian banks which it can't use.
According to the report in NDTV, Lavrov Foreign pointed to a ballooning trade surplus with India.
"This is a problem," the report quoted Lavrov as having said in Goa on the sidelines of the Shanghai Cooperation Organization meeting.
"We need to use this money. But for this, these rupees must be transferred in another currency, and this is being discussed now,” Lavrov was quoted as having said.
It said India's total exports to Russia shrunk 11.6% to $2.8 billion in the first 11 months of the 2022-23 financial year, while imports rose nearly fivefold to $41.56 billion, according to data from the Ministry of Commerce and Industry.
“That surge came as refiners have scooped up discounted Russian oil in the past year that's been shunned by the West in response to President Vladimir Putin's invasion of Ukraine,” it said.
It aslo said imports of Russian crude by India reached a record 1.68 million barrels a day in April, up sixfold on a year earlier, according to Vortexa Ltd, a data intelligence firm.
“The Kremlin initially encouraged India to trade in national currencies following sanctions on Russian banks and a ban on transactions using the SWIFT messaging system,” it said.
“But volatility in the ruble soon after the war began meant plans for a rupee-ruble mechanism for oil imports were abandoned. India has resisted pressure from the US to scale back relations with Moscow since the invasion of Ukraine,” it said.
“The imbalance in trade for Russia means the volume of 'frozen funds' can reach tens of billions of dollars," the report quoted Alexander Knobel, director of the Institute of International Economics and Finance of the Ministry of Economic Development.
"The situation is aggravated by India's historically high aggregate trade deficit, which reduces the possibilities of clearing settlements with third countries,” he was quoted as having said.
Russia is India's largest supplier of weapons and military hardware, though defense supplies to the later have stalled for lack of a payment mechanism that doesn't violate US sanctions.
It said Indian payments for weapons amounting to more than $2 billion have been stuck for about a year as New Delhi has been unable to settle the bill in dollars because of concerns about falling foul of secondary sanctions, while Russia is reluctant to accept rupees for purchases.
