Global Times recently reported that, according to Indian media, the Indian government may soon resort to swapping rupees for trade with Russian rubles, bypassing Western sanctions to avoid disruptions to India-Russia trade. Since the end of 2021, Russian and Indian defense export payments have been made in rubles and rupees, abandoning the use of U.S. dollars. To ensure Russia maintains fertilizer supplies to India amid sanctions, the Indian government and banking sources revealed there is a plan for Russian banks and companies to open Indian rupee accounts in some state-owned banks for trade settlement as part of the barter system. Russian economic experts pointed out that Russia is still evading sanctions through some friendly neighbors. Russia’s trade and capital flows will turn east again. Global Times also reported that, as one of the world’s leading arms exporters, the new round of U.S. sanctions may hugely impact Russian military enterprises on their export of weapons systems. India may have to swallow the “bitter fruit” produced by the U.S. and the West’s sanctions against Russia. Russia has been India’s largest arms supplier since the 1970s. Although the United States has been courting India in recent years to provide India with American-style equipment, more than 60 percent of India’s weapons and equipment comes from Russia and India’s authorized defense industry production chain basically comes from Russia. Senior Indian government officials said that the Indian army currently has sufficient reserves of Russian-made ammunitions and weapons’ spare parts. However, India’s orders for weapons worth about US$8 billion from Russia will face uncertainty. Since Russia was kicked out of the SWIFT system by the United States and the West, payments for arms transactions between the two countries will be seriously affected. In addition, the weapons projects jointly developed and produced by India and Russia may also be hit hard.
Source: Global Times, March 4, 2022