India’s efforts to promote settlement of foreign trade in Indian rupees are bearing fruits, with neighbouring countries like Bangladesh and Sri lanka being the first to use the route.
Sri Lanka has included Indian rupee in its list of designated foreign currencies while with Bangladesh a new mechanism has been launched last month to settle trade in Indian rupees, Minister of State for Commerce and Industry Anupriya Patel said in a reply to a question in Lok Sabha.
Bangladesh is the sixth largest export market for India. In FY 23 India exported $11.6 billion worth of goods to Bangladesh, which was 27% less than the previous year. India’s imports from Bangladesh in 2022-23 stood at $2.02 billion up 2.1 from previous year.
Biggest export to Bangladesh is cotton yarn whose share is 8.7% followed by petroleum products at 7%. India’s exports to Sri Lanka stands at $5 billion while imports are $ 1 billion.
Significant part of the trade with Nepal is being carried out in Indian currency while with Bhutan all trade is in rupees, the minister said.
Two Indian and Bangladeshi banks each have been designated to settle bilateral trade in Indian rupees, the minister said.
From the Indian side the two banks are State Bank of India and ICICI Bank while from Bangladesh Sonali Bank PLC. and Eastern Bank from Bangladesh are part of the mechanism.
For rupee trade with Sri Lanka Authorised Dealer (AD) Banks in India have been permitted to open Rupee Vostro Accounts. “Accordingly, Rupee Vostro Accounts of eight corresponding banks from Sri Lanka have been opened with respective AD Banks in India, with prior approval of the Reserve Bank of India (RBI).”
The minister said an arrangement to facilitate bilateral trade payments between India and Iran was adopted in November 2018, in supersession of all previous agreements.
Rupee trade mechanism has been initiated to facilitate trade in national currency with Russia. RBI had issued the guidelines for opening Special Rupee Vostro Accounts (SRVA) by foreign banks in Indian commercial banks. “As of July 2, 2023, RBI has approved 34 applications from different Russian banks for opening SRVA in 14 Indian commercial banks,” Patel said.
