- A ruble-rupee pact between Russia and India could come as soon as next week, the Federation of Indian Export Organisations told CNBC.
- The agreement would allow the countries to keep doing business without the use of US dollars.
- "Now that the whole of the West is banning Russia, there will be a lot of opportunities for Indian firms to enter Russia," the FIEO's chief said.
Russia and India could revive their Cold War-era currency pact as soon as next week, a top trade executive said, as Western sanctions restrict dollar-based transactions.
A Sakthivel, the president of the Federation of Indian Export Organisations, told CNBC Wednesday the Indian government is working on a deal that would allow several Indian banks to use rupee-ruble ledgers.
Currently, Russia is barred from certain international payment mechanisms due to its invasion of Ukraine. But rupee-ruble ledgers would allow Indian exporters to keep doing business with Russia without the use of US dollars, which is the primary international trade currency.
The move risks endangering political relationships with Western countries down the road, but also provides a commercial opening for India.
"Now that the whole of the West is banning Russia, there will be a lot of opportunities for Indian firms to enter Russia," Sakthivel told CNBC.
India is the world's third largest oil importer, and a rupee-ruble mechanism could reduce India's risk of potentially stiffer limits on Russian oil, which so far have not been subject to most sanctions. But US and UK are banning it, and support is growing among EU states to do so as well.
Last week, India bought 3 million barrels of Russian crude at a steep discount, underscoring the potential for a currency deal between the two nations.
Meanwhile, Saudi Arabia and China have also been exploring an oil deal to circumvent the US dollar. The two countries are in talks to price oil contracts in yuan, which would snap Saudi Arabia's 50-year precedent of exclusively trading oil in dollars.