Indian importers plan to increase purchases of Russian crude oil and coal at discounted prices, media reports have stated.
According to The Economic Times, India’s state-owned oil refiners plan to boost Russian imports, shifting their purchasing strategy from tenders to negotiated deals in order to get larger discounts.
“In the coming weeks, Indian importers expect an increase in oil purchases from Russia. Due to the events in Ukraine and the outbreak of Covid-19 in China, India can get more oil at a more attractive price than before,” the publication stated, citing market sources. India has already increased purchases of Russian oil, having bought 15 million barrels of it since late February at a 25% discount. The discounts were offered by Moscow to secure trade contracts, amid the sanctions, placed on Russia by the US and its allies in response to its military operation in Ukraine. India has declined to join the sanctions campaign.
Separately, S&P reported that India is looking to raise imports of Russian coal amid stockpile shortages, as Moscow’s discounted prices are much lower than those on Australian and South African coal. Also, new purchase offers are expected soon, as, according to data from India’s Central Electricity Authority, stockpiles at Indian power plants as of April 13 were enough for little over eight days of coal burn. India imported 1.76 million metric tons of coal from Russia in 2021, according to data from Iman Resources. Market sources say that the only obstacle to buying Russian oil and coal for Indian importers is the difficulty in finding a payment method.
Western countries have cut off Russian banks from using the SWIFT financial messaging network, which facilitates interbank payments, and have limited their ability to conduct business using the US dollar and the euro.
However, at the end of March reports emerged that Russia and India were working to create a new transaction mechanism for bilateral trade, which would allow for settlements in national currencies, rubles and rupees. Reports say the countries may opt for adopting the Russian Financial Message Transfer System (SPFS) for bilateral trade, which is an analog of SWIFT.
According to analysts, a rupee-ruble trade mechanism is key to continued trade growth between the two countries, as India’s economy needs Russian energy and commodities to grow and Russia needs the huge Indian market to offset the impact of Western sanctions.
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