India will soon start trading with Russia in rupees as top lender State Bank of India has agreed to facilitate the new mechanism, the president of India’s exporter group said on Wednesday.

India’s exports to Russia have slowed since the imposition of Western sanctions against Moscow following its late-February invasion of Ukraine.

“State Bank of India has come forward for facilitating trade in rupees with Russia and some other banks have also shown interest,” A. Shaktivel, president of the Federation of Indian Export Organisations (FIEO), a body set up by the trade ministry to promote exports, told reporters.

He said the name of the corresponding Russian bank could be announced in the next 15 days.

The Reserve Bank of India in July introduced a mechanism to settle international trade in rupees to stave off the impact of the depreciation of global currencies.

The move was seen as aiding trade with sanctions-hit Russia, as a similar mechanism was previously used for setting payments with Iran, which has also faced sanctions.

In April-July, the first four months of this fiscal year, India’s exports to Russia fell by about a third, while imports leapt as refiners raced to buy discounted Russian oil, according to government data.

Indian companies are already swapping out dollars and euros for Asian currencies to settle trades to avoid Western sanctions on Russia.

Shaktivel said the government could extend export incentives under the rupee trade mechanism to boost shipments to Russia and increase the acceptability of the domestic currency.

The most likely incentive that will be granted would apply a current programme for trades using fully convertible currencies such as the dollar and the euro to the rupee, which is only partially convertible, Reuters reported last month.

Russian President Vladimir Putin and Indian Prime Minister Narendra Modi will meet in Uzbekistan on Friday on the sidelines of a summit of the Shanghai Cooperation Organisation, a regional security bloc, to discuss issues including boosting trade. read more

“The trade in rupees could boost Indian exports to Russia to about $5 billion in the current financial year,” Shaktivel said. That would be up from about $3.3bn last fiscal year.

Separately, Ajay Sahai, director general of the FIEO, said India’s total merchandise exports this fiscal year could rise by about 11 per cent to over $470bn.