India is considering using a Russian alternative to the SWIFT financial messaging system for making payments in trade deals with Russia, according to a report from *Business Line*. This move comes as both nations seek to reduce their reliance on the US dollar and navigate around Western sanctions.
Russia’s SWIFT alternative is called the System for Transfer of Financial Messages (SPFS), which was created by the Russian central bank after Russia was cut off from the global SWIFT network due to sanctions related to the conflict in Ukraine.
India’s central bank, the Reserve Bank of India (RBI), is now in talks with Russia to potentially use this system. The idea is to make trade between the two countries faster and more efficient, especially in terms of settling payments directly in their national currencies—rupees and rubles—instead of using the dollar.
This could be a significant shift in how the two countries do business with each other. The RBI believes that using the SPFS system could lead to quicker and cheaper transactions. It’s also part of a broader goal of “de-dollarization,” which means relying less on the US dollar in international trade. By doing so, India and Russia hope to avoid the complications that come with Western sanctions.
However, there’s a catch. This idea is politically sensitive because the West has imposed strict sanctions on many Russian financial institutions, and the SPFS itself has been targeted by these sanctions. The RBI is being careful in evaluating the risks. They are worried that if India starts using Russia’s financial messaging system, it could be seen as an attempt to dodge these Western sanctions. This could lead to consequences for Indian banks, which may face secondary restrictions from the US or Europe.
Despite the risks, India and Russia are pushing forward in their efforts to strengthen trade ties while cutting out the dollar. Last month, *The Economic Times* reported that both countries are looking into creating a direct rupee-ruble payment system. This would allow them to set their own exchange rate without involving the dollar, making it easier to trade even with the restrictions.
All in all, the discussions between India and Russia represent a bigger trend in global trade: more countries are seeking ways to do business without being dependent on the US dollar, especially in the face of political and economic pressure from the West. Whether India will fully embrace this new system remains to be seen, but it’s clear that the world of international trade is evolving.
