The Indian government will be reporting about an upcoming deal with the Russian government, according to which both nations will carry on with trade together. The agreement will bypass the sanctions placed on Russia by the West.
India and Russia are going to adopt the ruble-rupee currency exchange system while doing business with each other, as a recent report by CNBC explains. This deal will significantly hurt the U.S. economy, and thus cause shockwaves throughout the international economy. What is happening is the first serious competition to the petrodollar is now entering the market.
Using the ruble-rupee system will remove both nations’ dependency on the SWIFT telephonic network for doing business with one another. This will also give both countries protection from Western interference in their business dealings; specifically, in the form of sanctions. Through this trade agreement, India can also continue purchasing Russian energy exports.
According to the President of the Federation of Indian Export Organizations, Dr. A. Sakthivel, a proposal is in process which would permit nearly five state-owned Indian banks to be directly involved in the trade agreement with Russia. The finance minister of India and the central bank governor are in discussions with banks regarding the ruble-rupee aspect of the trade agreement.
Dr. Sakthivel also said that the whole world is placing sanctions on Russia, while India is taking advantage by enhancing their market presence in Russia. The global ban on Russia is creating opportunities for many Indian businesses to enter the Russian market.
Despite the potential benefits to India, this trade agreement will likely upset their Western allies. Compared to Russia, the United States is a much larger consumer of Indian goods. But there has long been a strong relationship between India and Russia, and it seems that they are firmly taking a side in the conflict that is causing division throughout the developed world.
India imports 85% of its military equipment from Russia and Russian allies. India and Russia have always maintained a good relationship. Their neutral stance regarding Ukraine’s invasion of Russia did not go over well with the West, and this new trade agreement is a sign of other divisions.
However, the Indian Government is being very careful and closely examining all aspects and possibilities regarding the deal, according to Dr. Sakthivel.