Government Initiatives for International Trade in Indian Rupees
The government is encouraging banks to prompt their clients to settle international trade in Indian rupees (INR). Efforts are underway to remove obstacles hindering the swift adoption of the Special Rupee Vostro Account (SRVA) mechanism, which facilitates settlement in INR.
Reserve Bank of India's Role
- The Reserve Bank of India (RBI) is working towards making the Indian Financial Network (Infinet) accessible to international participants.
- This move aims to ensure secure fund transfers through the SRVA.
Context of the Initiatives
- These initiatives are part of strategies to address reciprocal tariffs imposed by the US.
- The US has announced a 26% tariff on imports from India, effective from April 9.
Benefits of INR Trade Settlement
- Reduced dependency on the US dollar.
- Lower foreign exchange costs.
- Faster cross-border transactions.
Opportunities and Future Plans
- Countries are exploring options for more bilateral trade due to ongoing tariff wars.
- There is potential for faster adoption of local currency settlements.
Existing Currency Settlement Arrangements
- The RBI has established local currency settlement arrangements with the United Arab Emirates, Indonesia, and the Maldives.
