India allows Russian investment
India will allow sanctions-hit Moscow to invest and borrow on its domestic market, the Economic Times reported on Thursday. The move comes as countries around the world introduce new restrictions against Russia over the conflict in Ukraine.
According to the report, Moscow has been approved to invest in Indian corporate debt funds. The country has also been allowed to pay for the investments through a Reserve Bank of India (RBI) account. These funds have reportedly accumulated pending payments for defense purchases made from Russia.
New Delhi also licensed Moscow to invest in debt securities. Media reports say that Russian government officials have asked their Indian counterparts to relax India’s External Commercial Borrowing (ECB) framework. This would allow Russian entities to invest in bonds of Indian companies, known as ‘Masala bonds’, and pay for these investments through an account with the RBI. Masala bonds are rupee-denominated bonds issued overseas by Indian companies. Both government and private entities can issue them.
Russia and India are also currently negotiating a ruble-rupee payment mechanism after Moscow offered the development of an alternative to SWIFT to its trade partner. The arrangement aims to boost commerce between the two countries by avoiding dollar-denominated trade. It would allow India to continue purchasing Russian oil, weapons, and other goods.
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