Russia’s Sanction-Proof Route Into India’s Stock Market

Russia has quietly found a way into India’s stock market—without using dollars, euros, or even moving money across borders.

And it is happening just as Washington sharply escalates pressure on New Delhi.

Russia’s largest lender, Sberbank, has launched a new mutual fund called First–India, giving Russian retail investors direct exposure to Indian equities by tracking the Nifty 50.

On the surface, it looks like a routine product launch. In reality, it is a sanctions-era workaround—designed to solve a problem that has suddenly become far more urgent.

Why Russia Needed a New Way to Use Indian Rupees

Since 2022, Russia has sold massive volumes of crude oil to India. With Western sanctions restricting dollar-based settlements, a significant share of that trade was paid for in Indian rupees.

Those rupees did not move to Moscow. They accumulated in Vostro accounts—Russian bank accounts held inside Indian banks.

India does not export enough to Russia to absorb that surplus. Currency conversion options remain limited. As a result, billions of rupees sat idle, steadily losing value over time.

In financial terms, this is dead capital.

The Rupee Trap Few Were Explaining

The situation is simple to explain.

Imagine being paid in store credit that only works at the buyer’s shop—where there is nothing you want to purchase.

That is the corner Russia found itself in.

With no easy way to convert rupees into rubles or dollars, the only viable option was to deploy the money where it already existed—inside India’s financial system.

That logic underpins Sberbank’s First–India fund.

Converting Trapped Cash Into Indian Businesses

The fund allows Russian investors to buy exposure to India’s largest and most liquid companies across banking, energy, technology, and consumer sectors by tracking the Nifty 50.

For Russian households, it creates the first direct and regulated route into Indian equities. For Moscow, it converts an unusable trade surplus into participation in one of the world’s fastest-growing major economies.

For India, it channels foreign capital without involving Western financial rails.

How the Money Moves—Without Crossing Borders

The structure deliberately avoids cross-border transfers:

• Russian oil exporters sell crude to Indian refiners such as Reliance Industries
• Payments in rupees flow into Sberbank’s account in Mumbai
• Russian investors subscribe to the fund using rubles at home
• Sberbank retains those rubles within Russia
• The rupees already in India are used to buy shares of companies like HDFC Bank and Infosys

No dollars are involved.
No SWIFT system is touched.
No money crosses borders.

From a sanctions perspective, the design is remarkably resilient.

Why the Timing Suddenly Matters

This financial innovation comes as geopolitical pressure on India’s Russia trade intensifies.

On January 5, 2026, U.S. President Donald Trump warned that Washington could “very quickly” impose substantially higher tariffs on India if it does not halt imports of Russian oil. Speaking aboard Air Force One, Trump accused New Delhi of buying discounted Russian crude and reselling it globally—thereby supporting Russia’s war effort in Ukraine.

While calling Prime Minister Narendra Modi a “very good man,” Trump said Modi “knew I was not happy” with the ongoing oil trade. India already faces tariffs of up to 50% on several goods, including penalties tied specifically to Russian energy imports. Those could rise further if negotiations fail.

India has pushed back, calling the U.S. position hypocritical and pointing to continued Western trade with Russia in LNG and fertilizers. Senior officials, including NSA Ajit Doval and External Affairs Minister S. Jaishankar, are expected to visit Russia soon as the situation evolves.

A Sanction-Proof Financial Hack—With Limits

This makes the First–India fund more than a mutual fund. It is a strategic response to tightening pressure.

Risks remain. Investors exiting the fund will still receive rupees unless trade imbalances ease or sanctions lift. Currency depreciation also looms, with both the rupee and ruble historically volatile.

Yet the broader shift is undeniable.

Sberbank has turned a structural constraint into a financial feature—showing how sanctioned capital can be redirected into productive assets without touching the dollar system.

It is clever.
It is risky.
And at a moment of rising trade threats, it may offer a glimpse of how global finance adapts under pressure.

Most people asked where Russia’s rupees would go.
Now the more urgent question is how long this workaround can last.

Editor’s Note: The core idea for this explainer was inspired by a LinkedIn post by Jayant Mundhra. TICE News has independently expanded, contextualised, and verified the analysis with additional reporting.