Negotiations between India and Russia over trade conducted in the Indian rupee have not been halted, even as officials acknowledge several sticking points that still require thorough discussion. This was the message relayed by government sources cited by The New Indian Express, which stressed that discussions remain active and that both sides are working to address outstanding concerns rather than walking away from the dialogue altogether.
Officials from New Delhi clarified that reports suggesting a suspension of talks were inaccurate. They acknowledged that questions exist about how Russia might utilize surplus rupees held in vostro accounts, but emphasized that the negotiations continue and are aimed at finding workable solutions that can underpin bilateral trade using the rupee. The exchanges, officials noted, are part of a broader effort to diversify and modernize the settlement methods used in India-Russia trade, especially in the wake of shifting global financial dynamics.
India formally authorized the use of its national currency in international trade arrangements in November of the previous year. The move, explained as part of a strategic foreign trade policy, seeks to bolster exports and reduce reliance on traditional hard currencies during cross-border transactions. Still, recent reporting from Reuters highlighted that Moscow and New Delhi have yet to reach agreement on specific bilateral arrangements denominated in rupees. The differing positions reflect the complexity of aligning monetary practices with export incentives, cross-border payment systems, and regulatory frameworks in both countries.
One principal reason for the ongoing disagreements concerns Russia’s limited ability to convert the Indian currency into other currencies on a large scale. This limitation makes rupee-denominated trade less attractive in practical terms, as it introduces liquidity and conversion risks that could undermine profitability for traders on either side. As a result, participants in the bilateral market have found themselves returning to US dollar settlements in many cases, even while officials from both capitals say they are actively exploring alternatives that would sustain a broader use of the rupee in commerce. These discussions are being conducted with careful attention to exchange rate stability, regulatory compliance, and the operational realities of both economies, according to multiple Indian government officials and policy observers.
Analysts observe that the rupee initiative aligns with a larger pattern of efforts by major economies to expand settlement options beyond the dollar, a trend driven by supply-chain resilience concerns and the desire to diversify foreign exchange exposure. In this context, the India-Russia dialogue includes technical teams examining liquidity, capital flows, and the possible role of settlement infrastructure that could support more frequent rupee transactions without creating added financial risk. Still, the parties must resolve practical issues around currency convertibility, settlement timelines, and the establishment of clear rules for risk management before broader implementation can occur, a process that remains underway and non-linear in nature.
Observers caution that while the goal of stronger rupee-based trade remains intact, achieving a robust framework will require ongoing, iterative negotiations. The situation continues to be monitored by policymakers and market participants who are keen on a credible pathway that could reduce exposure to dollar volatility and potentially lower transaction costs for certain categories of bilateral trade. The evolving talks reflect a broader global dialogue about currency diversification and how major trading partners can collaborate to create more resilient, interconnected financial arrangements.
In sum, while India and Russia have not abandoned the idea of rupee-based settlements, practical barriers persist. The dialogue is expected to persist through further meetings and policy adjustments, with both sides seeking a viable blueprint that aligns regulatory standards, commercial realities, and strategic interests. The persistence of negotiations signals a shared interest in expanding financial cooperation between the two nations, even as the path to a fully operational rupee settlement remains a work in progress.
Attributions: The New Indian Express provided reporting on official statements from government sources, and Reuters contributed coverage on the evolving positions of Moscow and New Delhi regarding bilateral agreements in rupees.