PM Modi and President Putin discussed alternatives to payments in dollar. Modi and Putin discussed alternatives to payments in USD

by Geeta Mohan

India signed multi billion dollar deal of S-400 air defence systems with Russia. Modi, Putin discussed that more trade should take place in our own currencies. Russia feels both sides should study as to how to move forward. Prime Minister Narendra Modi and President Vladimir Putin discussed alternatives to payments in dollar on Friday during the 19th annual bilateral summit.

With the US administration breathing down India's neck with sanctions under CAATSA and no presidential waiver in sight, India took the bold decision and went ahead with multilateral-billion dollar defence deals including the supply of S-400 air defence systems, emphasising the importance of India-Russia strategic partnership.

Government sources told India Today, "Rupee-Rouble mechanism was discussed. There was similarity of views that more trade should take place in our own currencies. The Russians did feel both sides should study as to how to move forward."

A major part of discussion between government-to-government and business-to-business has been the eventuality of any form of sanctions by the US that could restrict trade between the two countries.

Speaking to India Today the Russian Trade Minister Denis Manturov said, "We have had such experience in the past. In several shipments we have already used rouble as a currency and rupee as a commercial national currency. For us it's good to have such an arrangement as well because this will promote your local rupee currency."

India Today has learnt that the two countries and industries on both sides are discussing the Rupee-Rouble arrangement as payment and transaction methods to have uninterrupted economic, trade and defence cooperation.

Gasprom Bank's Representative in India Sergey Mitreykin said that the banking communities had been talking about this arrangement for the past two-three years and now because of the current environment taking, it was time to take some practical steps instead of just discussing them.

"I am absolutely certain that it is a totally workable solution. The only issue is that everybody is used to working in dollars, the framework is there, bank accounts and processes are in place; in Rupee-Rouble you would have to set that up which would take some time and cost. So, the sooner two commercial parties decide to look at this arrangement, they will have to do some homework and incur some cost but it will take off without a problem," he said.

Instead of using dollars, the two nations are looking at the Rupee-Rouble arrangement or some other currency which is not affected by the Americans.

Russia has been pushing for this mode of payment for a while but India has been reluctant given the depreciation in Rouble in the past years.

But Andrey Slepnev, Director of Russia Export Center, struck a positive not and dismissed US actions as "illegal" and reaffirmed the need for continuity in bilateral cooperation between India and Russia.

"We do hope that illegal measure against Russian federation would not touch upon the goodwill to continue our cooperation. Of course, trade in national currencies has been a trend for quite a while. It was used before also when sanctions were in place," said Slepnev.

While there is no specific mention about this arrangement in the joint statement this year, last year the two sides decided to promote settlements through national currencies.

"We will jointly encourage our business communities to use the existing workable schemes and mechanisms for settlements in national currencies elaborated by the Reserve Bank of India and the Bank of Russia," said the joint statement in 2017.