(Image Courtesy: DD)
NEW DELHI: India is actively promoting trade settlements in the rupee and local currencies to help partner nations struggling with shortages of hard currencies continue importing essential goods, Finance Minister Nirmala Sitharaman said on Friday.
Speaking at an interaction with the Atlantic Council on the sidelines of the IMF-World Bank annual meetings in Bangkok, Thailand, Sitharaman outlined the mechanism as a practical response to growing foreign exchange constraints faced by several countries.
Rupee Settlements as a Trade Continuity Tool
Sitharaman said countries that find it difficult to access hard currencies such as the US dollar often struggle to maintain trade flows even when they need to import critical items. Local currency and rupee settlements could help bridge this gap.
“One of the things that we in India want to do is to settle in rupee, whatever the payment is got to be done by those countries which import goods from us,” she said.
She added: “Rupee and local currency settlements are something which we want to do for the benefit of countries which are starved of hard currencies but yet need to import some goods, and, therefore, rupee trade is trying to make it possible… for local currency settlements to keep trade going. It is a method we have understood and are working on it.”
The initiative aims to ensure that foreign exchange shortages do not disrupt bilateral trade, particularly for essential commodities.
Backdrop of Global Economic Stress
Sitharaman linked the push for alternative settlement mechanisms to broader global challenges. Rising economic downturns, geopolitical tensions and ongoing conflicts have left many nations facing debt distress and balance-of-payments crises.
She noted that multilateral development institutions often take three to four years to respond effectively to such problems, though some improvements are now underway.
In this environment, India is placing greater emphasis on meaningful bilateral relationships alongside multilateral engagement. Progress on various trade agreements is seen as a way to strengthen partnerships, she said.
Views on Existing Trade Arrangements
On the India-ASEAN trade agreement, Sitharaman observed that the current arrangement is skewed against India. While New Delhi is not opposed to ASEAN countries benefiting, it wants concerns of Indian importers, markets and manufacturers to be addressed.
“The trade agreement we have with ASEAN countries, we are not against ASEAN benefitting from it, but it is very skewed against India,” she said. The two sides are reviewing the pact, and India wants to continue with it in a “slightly refashioned manner.”
She also reiterated India’s decision to stay out of the Regional Comprehensive Economic Partnership (RCEP), stating that the agreement did not offer sufficient benefits for the country. India continues to trade with RCEP members but believes joining the pact would not have been favourable.
The focus on rupee and local-currency trade settlements reflects India’s effort to expand the international use of the rupee while offering practical support to trading partners under financial stress.
By facilitating payments in rupees for Indian exports, the mechanism could help sustain trade volumes, reduce pressure on partner countries’ foreign exchange reserves and strengthen economic ties.
Sitharaman’s remarks come at a time when several developing economies are grappling with currency shortages amid global volatility. India’s approach seeks to turn these constraints into opportunities for deeper bilateral engagement and more resilient trade frameworks.
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