$39 billion for oil sold by Russia "stuck" in Indian banks

Oil deliveries from the Russian Federation to India increased 11 times. However, huge and so far unsolvable problems have arisen with the payments for the supplied raw materials.

The cost of oil sold by Russia to India has reached record amounts. Due to the sanctions imposed against the Russian Federation, trade is carried out in national currencies, but Russian exporters are faced with the inability to receive money for the sold raw materials: $ 39 billion, informed Reuters source in banking circles, stuck in Indian banks, and oil companies cannot return them to Russia.

The problem concerns, among other things, Indian rupees, which exporters receive instead of world currencies. According to the banker, the problem that has not yet been solved has existed since last year and has assumed colossal proportions: in terms of the exchange rate, this amount is approximately 3.6 trillion rubles. These are the annual budget of the entire program to support the national economy (3.5 trillion rubles), almost three annual budgets of the entire higher education system (1.36 trillion rubles a year) and more than 11 annual budgets of large regions, such as Novosibirsk or Nizhny Novgorod regions (300 billion rubles).

It is currently not possible to use rupees. Their withdrawal from India is blocked by local regulation: the Indian Central Bank prohibits the circulation of its currency outside the country. Deliveries of goods from India, on which rupees could be spent, are negligible: in January-May of this year they amounted to only $639 million, despite the fact that Russian exports to the Indian market were 40 times more – $26.5 billion.

Dinesh, president of the Confederation of Indian Industry, acknowledged at a briefing in Delhi on August 16 that no solution had yet been found. The reason for the trade imbalance is the sanctions imposed against the Russian Federation, he says: because of this, settlements in dollars are too risky:

“The significant amount of rupees accumulated by Russian companies cannot be used. We are now continuing to look for a mechanism.”

However, the search for a solution has so far been fruitless, although it has been ongoing since the fall of 2022. Kirill Pestov, managing director for development at Moscow Exchange, also complained in March that rupees could not be brought into Russia and converted into rubles. They have been accumulating with Russian companies since the middle of last year, and Moscow expected appropriate decisions from the Central Bank of India, but … they did not follow.

An attempt to buy goods for rupees also did not lead to anything. Last November, a delegation of Russian officials traveled to New Delhi and presented a list of 500 items that India could sell to Russia: pistons, oil pumps, ignition coils, bumpers, equipment for the textile industry, including threads and dyes, almost 200 items. for metallurgy. In January, a second visit took place, but eight months after it, the process did not get off the ground.

The head of the Ministry of Foreign Affairs of the Russian Federation, Sergei Lavrov, at the meeting of the SCO in India, admitted: “This is a problem. We need to use this money. But in order to do this, these rupees need to be converted into another currency, and this is now being discussed.”

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