Buoyed by the recent trend of the countries choosing to trade with India in Rupee rather than Dollar or other currencies, New Delhi is all set to propose a rupee-trade option at the first Trade and Investment Working Group (TIWG) meeting under India’s G20 Presidency being held in Mumbai.
After Egypt proposed to trade with India in rupee, facing difficulty to source dollar for the import of about 1.5 lakh tonnes of rice, Commerce Secretary Sunil Barthwal said, New Delhi is interested on settling international trade with more countries in rupee and would push for the same at the TIWG meeting being held in India’s financial capital, Mumbai between 28 and 30 March.
More than 100 delegates from G20 member countries, invitee countries, regional groupings and international organisations will be holding deliberations on accelerating global trade and investments during the three-day TIWG meet.
Cairo has proposed to make payment in rupee for the rice import and if goes through, Egypt with join a group of 18 countries that have been trading with New Delhi in Indian currency.
The 18 countries trading in rupee are Fiji, Botswana, Guyana, Germany, Kenya, Israel, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles, Singapore, Sri Lanka, Tanzania, Uganda and the United Kingdom.
Reserve Bank of India (RBI) as on 14 March this year, has approved opening of 60 special rupee vostro accounts (SRVAs) of correspondent banks from 18 countries.
Officials pointed out that under the mechanism, Indian importers make payments in rupee that is credited to the vostro account of the correspondent bank of the partner country. Similarly, payment would be settled with Indian exporters in Indian rupee from the balances in the vostro account.
RBI has allowed the surplus rupee balance in these accounts to be used for payments for projects and investments, export, import advance flow management, and investments in government securities.
As regards trade in rupee, Barthwal said, “We are interested in improving the trade with respect to the currencies of the countries that are trading (with India). Definitely, we would like to see that rupee trade also happens, particularly with those countries which are facing (currency) issues.”
Reports said that Egypt and most of North African nations have been facing currency problems, especially with regard to the dollar. Between April and January this fiscal, Egypt has imported 76,858 tonnes of rice. The country recently purchased two ship loads of rice, however, faced tremendous difficulties in settling the trade in dollars.
Now, as Egypt needs another six ship loads of rice, which could weigh over 1.5 lakh tonnes and it has sought to make the payment in rupee.
Trade in rupee will not only ease their problems but put the Indian currency as an alternative to dollar, which may prompt other countries as well to turn towards rupee trade.
India is holding the G20 Presidency from December 1, 2022 to November 30, 2023. The G20 comprises Argentina, Australia, Brazil, Canada, China, EU, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, UK and USA. Pushing for rupee trade with G20 countries could make rupee a premier currency.
Incidentally, the G20 Countries together represent around 90 per cent of global GDP, 80 per cent of global trade, and two thirds of the world’s population.
Officials said, India will be using G20 platform to reach out to more countries to settle cross-border trade in Indian rupee, especially with those who are facing problems with a particular currency or a basket of currencies and are looking out ways to come out of the crisis.
The writer is a Delhi-based freelance journalist, who has reported and written on a wide range of subjects in an extensive career.