India Working To Expand Rupee Trade To Help Countries Facing Foreign Currency Shortages: Sitharaman

India is working to expand rupee-based trade settlements to help countries facing foreign currency shortages continue importing essential goods, Finance Minister Nirmala Sitharaman said on Friday.

Speaking at an Atlantic Council interaction on the sidelines of the International Monetary Fund (IMF)-World Bank annual meetings in Bangkok, Sitharaman highlighted the difficulties faced by economies struggling to access hard currencies.

She said settling transactions in rupees or other local currencies could help maintain trade flows when conventional foreign exchange payments become difficult.

The government is exploring mechanisms that would allow trading partners to settle payments without depending entirely on major international currencies.

Sitharaman said several countries were experiencing economic difficulties because of geopolitical conflicts, rising debt and balance of payments pressures.

These challenges often restrict their ability to purchase essential goods from international markets.

Local currency settlement arrangements could offer an alternative payment mechanism and support continued trade with India.

She said India had recognised the potential benefits of such arrangements and was working towards their implementation.

The Finance Minister also expressed concern about delays in assistance from multilateral development institutions.

According to her, responses to financial crises had sometimes taken three to four years, although efforts were underway to improve the process.

She emphasised India’s preference for strengthening bilateral economic relationships alongside participation in multilateral institutions.

FM Seeks Changes To ASEAN Trade Agreement

Turning to regional trade, Sitharaman described India’s existing agreement with the Association of Southeast Asian Nations (ASEAN) as disproportionately favourable to the bloc.

She clarified that India supported ASEAN benefiting from the arrangement but wanted concerns affecting domestic manufacturers, importers and markets addressed.

Both sides are reviewing the agreement, with New Delhi seeking revised terms rather than withdrawing from the partnership.

Sitharaman also defended India’s decision to remain outside the Regional Comprehensive Economic Partnership (RCEP).

India withdrew from the proposed agreement in November 2019 over concerns about rising imports, widening trade deficits and inadequate safeguards for domestic industries and agriculture.

She maintained that joining RCEP would not serve India’s economic interests.

However, India continues to maintain trading relationships with participating economies.

The Finance Minister’s remarks highlighted India’s focus on alternative trade settlement mechanisms and agreements that address domestic economic priorities.