The US move to bar Russia from the SWIFT international payment system could boomerang as several countries are now looking at expansion of alternative mechanisms. India and Russia are already in talks to integrate their respective payment mechanisms to ensure trade between the two nations does not suffer.
India, which imports more than 80 per cent of the total fuel requirements, is expected to further increase energy shipment from Russia. Amid rise in global oil prices following the Russia-Ukraine war, India's crude imports from Moscow have gone up from 0.2 per cent of the total requirements to 10 per cent since the start of this financial year.
On an average about 600,000 barrels a day are now being imported from Russia at a discounted price. The number could rise.
New Delhi and Moscow have initiated an exercise to thrash out a mechanism by which transactions can be settled through Mir, the Russia's indigenous payment mode and RuPay.
"Payment system is strategic now, given the current situation and sanctions against Russia. It is of utmost importance to have self reliance in the payments system and we need to work towards that," SJM national co-convenor Ashwani Mahajan told India Narrative.
"We have our own payments system, we need to see how to expand its global acceptance," Mahajan said, adding that India must attempt to integrate its own payments system with Russia's indigenous Mir.
Following the sanctions on Russia that disconnected Moscow from accessing the SWIFT international payment system, the Indian rupee is being primarily used to settle payments.
Though the rupee-ruble trade has not been successful in the past, the ongoing geopolitical shifts have prompted both countries to work on resolving the bottlenecks. The arrangement essentially facilitates settlement of payment between the two countries in their own currencies instead of the US dollar, Euro or the British pound.
"The Centre is looking at easing the payment mechanism to boost trade..however there are certain hurdles but both sides are moving fast to resolve those issues at the earliest," a person with direct knowledge said.
While RuPay, the Indian payment gateway, devised by the National Payments Corporation of India was launched in 2012, Mir, the Russian system for electronic fund transfers was adopted in 2017.
These gateways will also ease payments made in rupee or the Russian ruble.
In fact Russia's deputy foreign minister Alexander Pankin told TASS that Moscow had already initiated talks with several countries besides India for the use of the Mir payment mechanism.
"Payments system can be weaponised today and we cannot depend on other countries' mercy..India must look at this issue and even work towards making the rupee more acceptable," SJM's Mahajan added.
An analyst said that the US move has only brought the focus back on the necessity of de-dollarisation of global trade.
"Once more and more countries including China fall back on alternative payment mode, the US teeth will weaken," he said.