Russian oil exporters are unable to withdraw significant amounts of money earned from oil sales in India due to the absence of an effective mechanism for transferring funds abroad. This is caused by the limited convertibility of the Indian rupee and strict regulations for non-residents, complicating the use of accumulated funds.
This is reported by Finway
Increase in Funds in Vostro Accounts
Since the onset of Russia’s full-scale war against Ukraine and the implementation of international sanctions, transactions between Indian companies and Russian oil exporters are primarily conducted in rupees. Special Vostro accounts have been opened in Indian banks for this purpose. However, these funds can hardly be withdrawn from the country due to restrictions on rupee conversion and the lack of appropriate mechanisms.
Currently, these funds can only be used for paying for imports of Indian goods, settling local taxes, or investing in Indian projects. Additionally, a separate approval from the Reserve Bank of India is required to purchase shares or bonds, which is still under consideration.
“We are talking about the equivalent of hundreds of billions of US dollars. Despite requests from the Russians, India is in no hurry to provide opportunities for using this money.”
Benefits for India and Market Impact
Recently, amid escalating tensions in the Persian Gulf and a temporary easing of American sanctions on Russian oil exports, Indian refiners have increased their purchases of crude from Russia. This leads to a further rise in the volume of funds in rupees in the accounts of Russian companies.
According to data from April to December 2025, trade between India and Russia reached 63.6 billion US dollars, of which about 59 billion is attributed to oil exports. This is beneficial for the Indian economy: oil is purchased at significant discounts, and the funds remain in circulation within the country as they cannot be withdrawn abroad.
Additionally, due to the war in Iran, India is considering the possibility of resuming direct purchases of liquefied natural gas from the Russian Federation.
