US criticizes India amid possibility of Russia's proposal for rupee-ruble-denominated payments against Western sanctions

Russia's Foreign Minister Sergey Lavrov arrived in New Delhi to take forward the talks on the possible deal, media reports said. 

Amid the developments, the government told parliament this week that India has no plans to buy oil from Russia or any other country using rupees.

"Now is the time to stand on the right side of history, and to stand with the United States and dozens of other countries, standing up for freedom, democracy and sovereignty with the Ukrainian people, and not funding and fueling and aiding President Putin's war," Commerce Secretary Gina Raimondo told reporters in Washington on Wednesday. She called reports of the arrangement "deeply disappointing," while adding that she hadn't seen details, Bloomberg reported.

The criticism indicates a widening rift between India and other members of QUAD, including the US and Australia, viewed as emerging security partners against China's assertiveness in the Asia-Pacific region, as Foreign Minister Sergei Lavrov travelled to Delhi for talks.

Australia's trade minister Dan Tehan said the democracies should work in unison "to keep the rules-based approach that we've had since the second world war", said report.

India has repeatedly called for an immediate cease-fire and a diplomatic solution to the Russia-Ukraine conflict but abstained at the United Nations on votes for draft resolutions condemning Russia's invasion that were ultimately vetoed by Moscow.

Bloomberg reported on Wednesday that India was weighing the rupee-ruble-denominated payments option through an alternative to SWIFT.

After Russia's invasion of Ukraine, the U.S. and European Union blocked seven Russian banks from using the Belgium-based international payment system operator.  

Russia had the second largest number of SWIFT subscribers after the US.

The Bloomberg report said that the rupee-ruble-denominated payments are likely to be done through Russia's messaging system through SPFS.

In 2014, the Central Bank of Russia developed the Financial Message Transfer System of the Bank of Russia (SPFS) to counter the US government's threats to oust Moscow from the SWIFT system. So far, it was being used domestically but after, its exclusion from the SWIFT network, SPFS is being used for international money transfers.

According to the Bloomberg report, the Central bank officials from Moscow are expected to visit India next week to discuss the details. No final decision has been taken, it added.

Meanwhile, UK Foreign Secretary Liz Truss is set to hold talks with External Affairs Minister S Jaishankar on Thursday with a focus on “Russia's illegal invasion of Ukraine” even as Russian Foreign Minister Sergey Lavrov arrived this evening in New Delhi to take forward talks on the rupee-ruble payment to sidestep Western sanctions.

India's middle-ground position on the Russia-Ukraine conflict has garnered criticism from the US and its allies.

India's stance comes from its need for effective and affordable Russian arms to counter China, especially after border clashes in 2020. 

The strategic relationship between India and Russia goes back to the Cold War days and remains strong, even as PM Modi has moved the country more toward the U.S. orbit in recent years.

India's stand

On March 28, Minister of State for Petroleum and Natural Gas Rameswar Teli told parliament that India does not plan to buy oil from Russia or any other country with Indian rupees.

"At present, oil public sector undertakings neither have any contract nor is any such proposal under consideration from Russia or any other country for purchase of crude oil in Indian rupees," junior oil minister Rameswar Teli said, Reuters reported.

India is the world's third biggest oil importer and consumer.

However, the Reuters report said India is trying to find ways to pay for Russian imports in rupees but a formal mechanism has not yet been formulated, government and banking sources said.