The rupee-ruble trade mechanism may be ready as soon as next week. With Russia out of the SWIFT communications system and the country losing access to several international currency markets, India has been looking for alternatives to carry out trade with the strategic partner.

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One of the alternatives being explored was a rupee-ruble trade pact which would allow the countries to trade directly in each other's respective currencies. Now, the payment arrangement may be announced next week.

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A Sakthivel, president of the Federation of Indian Export Organisations (FIEO), told CNBC that the trade mechanism may be unveiled next week. The FIEO is the apex trade promotion organisation set up by the government and represents the interests of 200,000 exporters.

Sakthivel added that four to five PSU banks would be selected to engage in the trade, and the banks will be decided based on the consultations between the Reserve Bank of India governor, the finance minister and the banks.

While Russia’s bilateral trade with India is small, it is of strategic importance due to Russian military hardware and support that India relies on. Additionally, with the departure of hundreds of western companies from Russia amid continuing sanctions, Indian organisations have an opportunity to establish themselves within the country.

“Export to Russia is not much, only in agriculture and pharmacy products. Now that the whole of the West is banning Russia, there will be a lot of opportunities for Indian firms to enter Russia,” Sakthivel said.

However, how this will play out with the Indian government trying to balance its relationship with both Russia and the US is yet to be seen. While India has been able to play off its purchase of Russian discounted crude as a strategic energy transaction, it might not be able to do the same if it increases its trade with Russia by exporting items to the country.

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(Edited by : Thomas Abraham)