Putin, Modi to discuss trade, defence deals, local currency payments on Friday: Kremlin
A bilateral meeting between the Indian and Russian heads of state/government is scheduled ahead of the BRICS Summit being hosted in New Delhi
The agenda includes trade and economic cooperation, defence cooperation, and payment settlement in national currencies
India is seeking to address a widening trade deficit with Russia by pushing for greater Russian imports of Indian goods
Russia has stated that its increasing use of national-currency settlement is a response to sanctions-driven constraints on using the US dollar, not a deliberate "de-dollarisation" strategy
India-Russia Trade Deficit and Rupee-Rouble Settlement
India's trade with Russia has become heavily skewed since 2022, driven overwhelmingly by discounted Russian crude oil imports, producing one of India's largest bilateral trade deficits. To manage this without depleting foreign exchange reserves, both sides have expanded settlement in national currencies (rupees and roubles) instead of the US dollar, especially for oil payments.
Key Details
- India's trade deficit with Russia was reported at roughly $59 billion for a recent fiscal year, driven by crude oil and fertiliser imports against a much smaller Indian export base
- India's crude oil imports from Russia rose sharply (over 50% year-on-year growth reported in early FY2025-26), with Russia supplying roughly half of India's crude oil needs at discounted prices
- Rupee-settled imports (mostly Russian oil) totalled approximately $14.6 billion over a recent three-month period
- Russia has stated around 90% of its trade payments with BRICS countries are now conducted in national currencies — attributed to sanctions limiting dollar/SWIFT access rather than an ideological push for "de-dollarisation"
The summit's discussion on correcting the trade imbalance (via more Russian imports of Indian goods) and expanding local-currency payments directly addresses this structural deficit and the settlement mechanism built around it.
BRICS Grouping and India's Hosting Role
BRICS is a multilateral grouping of major emerging economies that has expanded significantly in recent years, and its annual summit rotates among member states. India hosting the summit places it at the centre of discussions on de-dollarisation debates, New Development Bank financing, and reform of global governance institutions.
Key Details
- BRICS originated as "BRIC" (Brazil, Russia, India, China) in 2009; South Africa joined in 2010, making it "BRICS"
- The grouping expanded in 2024 to include Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates as new members
- The New Development Bank (NDB), headquartered in Shanghai, is BRICS's dedicated multilateral lending institution, distinct from the IMF/World Bank
- Bilateral meetings between leaders (such as the India-Russia meeting) are typically held on the sidelines of the summit, distinct from the formal multilateral summit agenda
The India-Russia bilateral meeting is explicitly scheduled ahead of the BRICS Summit in New Delhi, illustrating how bilateral strategic ties are pursued alongside India's role as summit host.
Local Currency Settlement vs De-Dollarisation
Local/national currency settlement refers to bilateral trade being invoiced and paid for in the trading partners' own currencies rather than a globally dominant reserve currency like the US dollar. This is analytically distinct from "de-dollarisation," which implies a deliberate strategic move away from dollar dominance in the international monetary system.
Key Details
- Local currency settlement mechanisms between India and Russia use special Vostro/Nostro rupee accounts held by Russian banks in Indian banks (and vice versa) to settle trade without dollar conversion
- Russia's official position, as conveyed ahead of this meeting, is that its shift to national currencies is a pragmatic sanctions-workaround, not a coordinated de-dollarisation campaign
- India has separately pursued rupee internationalisation measures (e.g., Special Rupee Vostro Accounts, RBI's 2022 framework for international trade settlement in rupees) applicable beyond just Russia
The Kremlin's framing — cooperation on national-currency payments without an explicit "de-dollarisation" agenda — is a deliberate distinction likely to be reiterated at the bilateral meeting, relevant to how India calibrates its own currency-diversification approach amid US-India trade frictions.
- BRICS Summit venue for this cycle: New Delhi (India as host)
- BRICS expanded in 2024 to add five new members: Egypt, Ethiopia, Iran, Saudi Arabia, UAE
- India's trade deficit with Russia: approximately $59 billion (a recent fiscal year), driven mainly by crude oil imports
- Russia's share of India's crude oil imports: roughly 50%
- Share of Russia-BRICS trade settled in national currencies: approximately 90% (per Russian officials)
- Rupee-settled imports (largely Russian oil) over a recent three-month window: approximately $14.6 billion