Sitharaman pitches rupee mechanism to bridge global forex crunch, trade disruptions

Union Finance Minister Nirmala Sitharaman proposed a rupee-denominated trade settlement mechanism during her interaction with the Atlantic Council, held on the sidelines of the IMF-World Bank annual meetings in Bangkok, Thailand. The minister aimed to help partner nations facing hard-currency shortages and ensure uninterrupted supplies of essential goods.

Sitharaman stressed that local currency settlements could bridge the gap for countries experiencing foreign exchange constraints, enabling them to sustain critical imports despite currency limitations.

India is actively working on facilitating rupee-based settlements to support countries that require hard currencies for imports. The rupee trade is being explored to ensure that trade continues with countries facing such constraints. The Finance Minister expressed optimism about an early resolution to the India-US trade talks, as reported by Commerce & Industry Minister Piyush Goyal. The first phase of the trade pact between India and the US has reportedly been finalized and is currently undergoing legal drafting.

Sitharaman highlighted that growing trade imbalance and persistent restrictions on market access for Indian products posed major concerns in trade with China. Despite years of engagement, India has made limited progress in obtaining market access for products like generic medicines, bovine meat, vegetables, and other perishable goods. Non-tariff barriers, such as phytosanitary measures and other restrictions, have been identified as significant hurdles in trade between India and China.