Russia and India use national currency in arms transactions to replace the US dollar
Russia and India use national currencies for bilateral arms deals instead of the US dollar, said Alexander Mikheev, who heads Russian state arms exporter Rosoboronexport.
“Rosoboronexport has almost completely abandoned settlement in US currency”, RIA Novosti quoted Mikheev on Tuesday. “As far as India is concerned, all mutual settlements are made in rubles and rupees.”
Mikheev added that Russian state arms exporter Rosoboronexport is actively implementing compensation plans, which are also present in the contract documents signed on Monday.
“This is normal common practice, one of the trends in the world market,” Mikheev said.
Military cooperation between Moscow and New Delhi was put in the spotlight on December 6 when Russian President Vladimir Putin paid an official visit in New Delhi where he met Indian Prime Minister Narendra Modi. Russian Defense and Foreign Ministers accompanied Putin on a visit that saw the two countries strengthen their ties with a military and technical cooperation pact until 2031.
According to a joint statement released by the Kremlin press service after the talks, Moscow and New Delhi agreed to continue promoting trade in national currencies, rather than US dollars, and “reiterated their commitment to improve cooperation in defense, in particular by facilitating the joint development and production of military materiel. equipment.”
India and Russia have both been in talks on how to promote mutual settlement of payments through the “rupee-ruble transfer” route, which will help reduce costs and delays as well as risks associated with payments. .
The talks on the rupee-ruble route have started since relations between Russia and the United States deteriorated following the crisis in Ukraine in 2014 and have only worsened with allegations of interference by Russia in the 2016 presidential election, nerve agent poisoning in the UK and its role in the SolarWinds cyberattack, among other incidents. As a result, the Russian economy has been subject to international sanctions for the past seven years.
Russia has adopted a series of measures to move away from US greenbacks in favor of doing business in the national currency and reducing its dependence on the dollar. In June, Russian officials announcement Moscow’s plans to reduce the US dollar from its $ 186 billion national wealth fund. Once the changes to the NWF are completed, the share of Euro assets in the fund is expected to rise to 40%, the yuan to 30% and gold to 20%.
The Kremlin would make deliberate efforts to convince other countries to get rid of the dollar – especially those facing US sanctions and trade restrictions, including Iran and Turkey – and start doing business in their countries. national currency instead.
For India, doing business with Russia carries risks as the United States can impose sanctions on any country that conducts significant transactions with Russia’s defense and intelligence sectors under the Countering America’s Adversaries Through law. Sanctions (CAATSA). Yet India cannot afford to sideline Russia in its defense calculation, as India’s defense relationship with Russia goes back further than its relationship with the United States.
India’s military-political relations and arms trade with Russia, which began in Soviet times, have grown in recent years despite threats of sanctions from the United States.
India remains one of the largest and oldest purchasers of Russian defense equipment. The Soviet Union was India’s main supplier during the Cold War, and today most of its weaponry is Russian or Soviet made. On 70 percent of the Indian Air Force’s equipment is Russian-made, while 80% of its naval fleet is also Russian. Moscow and New Delhi currently have military contracts worth $ 35 billion.
Currently, India and Russia are jointly developing an extended-range air-to-air class of the BrahMos cruise missile, capable of downing major air targets equipped with an Airborne Warning and Control System (AWACS). Among the joint Indo-Russian military projects is the development of the fifth-generation Sukhoi / HAL (FGFA) fighter jet, also known in India as the Perspective Multi-role Fighter (PMF), production under license of the Su-30 warplane and the T-90 battle tank.
In October 2018, the two countries signed a $ 5 billion contract to supply five batteries of the S-400 missile systems to India. Other important deals include an agreement for India to purchase four Russian-made Project 11356 frigates and an agreement for Moscow to supply Igla portable anti-aircraft missile systems to New Delhi.
Russia is ranked first among the Caspian region’s arms exporters and second in the world behind the United States, according to Global Firepower 2021 Ranking. It is a crucial arms exporter that supplies countries in Asia and Oceania, the Middle East and Africa.