India pushes rupee-based trade settlements to help countries facing hard currency shortages: FM

Finance Minister Nirmala Sitharaman has said India is working to promote rupee-based trade settlements to help partner countries facing shortages of hard currencies continue importing essential goods from India.

Speaking during an interaction with the Atlantic Council on the sidelines of the IMF-World Bank Annual Meetings in Bangkok, Thailand, on Friday, Sitharaman said local currency settlements could help sustain trade with countries facing foreign exchange constraints.

She said India wanted payments for goods imported by partner countries to be settled in rupees, enabling trade to continue even when access to major international currencies was limited.

The Finance Minister said the mechanism was particularly relevant as geopolitical tensions, including wars, and economic downturns were pushing several countries into debt and balance of payments crises.

She also noted that multilateral development institutions had historically taken several years to respond to such challenges, although corrective measures were now being undertaken.

India Seeks More Balanced Trade Partnerships

On international economic cooperation, Sitharaman said India was pursuing stronger bilateral relationships and making progress on several trade agreements to deepen its economic partnerships.

However, she raised concerns over the existing trade agreement between India and the Association of Southeast Asian Nations (ASEAN), describing it as skewed against India.

She said India was not opposed to ASEAN countries benefiting from the agreement but wanted to address concerns faced by Indian importers, domestic markets and manufacturers.

The two sides are reviewing the agreement, and India wants to continue with it in a restructured form, the Finance Minister said.

Sitharaman emphasised that the objective was to ensure a more balanced arrangement while preserving the benefits of trade cooperation.

India Maintains Position on RCEP

The Finance Minister also reiterated India’s decision to stay out of the Regional Comprehensive Economic Partnership (RCEP), a major trade agreement involving economies across the Asia-Pacific region.

She said joining the agreement would not be in India’s interest, although the country continued to trade with its member economies.

India withdrew from the RCEP negotiations in November 2019 amid concerns over the potential impact of cheaper imports, particularly from China, widening trade deficits and inadequate safeguards for domestic industries and agriculture.

-PTI