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Trade between India and Russia has experienced a significant boost since the West imposed sanctions on Russia last year for its invasion of Ukraine. This has led to a change in the flow of oil and other goods, making Russia the largest supplier of crude to India this year.
The growing relationship has been expedited with Russia's Gazprombank playing a pivotal role by expanding their links with banks in India to facilitate trade between the two countries in national currencies. Gazprombank is Russia's third-largest lender and is an important conduit for the Russian energy trade.
Elena Borisenko, Deputy Chairman of the Board of Management of Gazprombank, told Reuters that they have "worked hard to establish our level of partnership with Indian banks." Describing the hard work put into the venture, she noted that "our representatives here worked hard," adding that they now have "infrastructure and payments from banks … it is much better than it was three months ago."
The growing trade relationship between India and Russia is leading to an increasing tilt of the trade balance in Russia's favor. One potential solution to turning this around would be for Russian companies to invest in infrastructure projects in India.
Borisenko noted that she is "hoping that it (trade) will be better, it will be improving, and … payments between Russia and India will be more and more in national currencies."
This partnership has also been helped by India's introduction of a framework to facilitate overseas trade in rupees last year, allowing many foreign banks to open vostro accounts with Indian banks.
This has allowed Gazprombank and other Russian institutions to open such accounts to help improve the trade relationship.
This news highlights the growing importance of national currencies in international trade. The ability to trade in national currencies is essential to trade between nations. It is a trend that is growing in popularity as nations attempt to bypass the U.S. dollar as the dominant currency for international trade. This shift could dramatically alter the global financial system in the years to come.
By Michael Kern for Oilprice.com
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Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com,