Delhi/Hyderabad, Oct 17 (Maxim News): India wants to expand rupee-based trade settlements to help partner countries facing foreign exchange shortages continue importing essential goods. Union Finance Minister Nirmala Sitharaman said the initiative could help maintain trade despite limited access to major international currencies.
Speaking during an interaction with the Atlantic Council in Bangkok, Sitharaman explained India’s approach on the sidelines of the IMF-World Bank annual meetings.
She said India was working to enable payments for Indian exports in rupees. This could help countries facing hard-currency shortages continue purchasing essential supplies from India.
The minister said economic downturns and geopolitical tensions, including wars, had pushed several countries into debt and balance-of-payments difficulties.
Rupee Settlements Aim to Keep Essential Trade Moving
Sitharaman said local-currency settlements could help countries maintain trade when they struggle to access foreign exchange. She added that India was working to make the mechanism more practical for partner countries.
The minister also discussed the role of multilateral development institutions in addressing financial crises. She said responses to such problems had often taken several years, although corrective efforts were now underway.
On trade relations, Sitharaman said India was pursuing stronger bilateral partnerships and making progress on several trade agreements.
However, she described India’s trade agreement with the Association of Southeast Asian Nations (ASEAN) as skewed against New Delhi. She said India wanted to continue the agreement while addressing concerns raised by domestic markets and manufacturers.
The two sides are reviewing the agreement, and India wants to reshape certain aspects rather than abandon the arrangement, she said.
Sitharaman also reiterated India’s decision to stay outside the Regional Comprehensive Economic Partnership (RCEP). India withdrew from the proposed agreement in November 2019 over concerns about cheap imports, trade deficits and protections for domestic industries and agriculture.
The government believes rupee-based settlements could support trade with countries facing foreign-exchange constraints. However, the practical impact will depend on participating countries, payment arrangements and their ability to use rupees for subsequent trade.
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