India is actively engaged in discussions with approximately 22 countries to promote bilateral trade using the Indian Rupee, revealed Finance Minister Nirmala Sitharaman in a recent television interview. This initiative aims to address the shortage of US dollars faced by many of these nations.
Sitharaman emphasized, "About 22 countries are negotiating and approaching us to see if bilateral trade can be held (in rupees). It is also because many of... those countries are running short of dollars."
In recent times, India has taken several steps to encourage the use of the Indian Rupee in international transactions. The country has established special rupee vostro accounts within domestic banks, facilitating the exchange of national currencies through collaborations with banks from 22 different countries.
According to the Central government's communication to the Rajya Sabha, the Reserve Bank of India (RBI) has granted permission for banks from 18 countries to open Special Vostro Rupee Accounts (SVRAs) specifically for settling payments in Rupees.
In response to an inquiry from Sushil Kumar Modi of the Bharatiya Janata Party (BJP), Bhagwat Karad, the Union Minister of State for Finance, explained that banks from these partner countries can establish SVRAs by collaborating with Authorised Dealer (AD) banks in India, subject to obtaining permission from the RBI.
The push for trade settlements in national currencies gained significant traction within the BRICS framework following the BRICS summit in Johannesburg. Foreign Secretary Vinay Kwatra highlighted that discussions regarding this initiative have been highly positive among BRICS nations.
During a special briefing by the Ministry of Foreign Affairs on the Prime Minister's visit to South Africa, Kwatra revealed that BRICS nations have been exploring ways to establish a mechanism for trade settlements in their national currencies.
"Conceptually," he elaborated, "Trade settlement in the national currency, we have already started working on it, not just as a discussion or a talking point but also on the ground cooperation."
"We are also pursuing trade settlements in national currency with several other countries. So, if it becomes a point of highly advanced discussions in the BRICS and the BRICS countries agree to do trade settlement in national currency, something which is of great promise within BRICS," Kwatra added.
This concerted effort by India to engage in trade using the Rupee not only strengthens bilateral economic ties but also underscores the growing importance of national currencies in international trade, reducing dependency on the US dollar.
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