India in talks with South Asian countries for cross-border Rupee trade

New Delhi: Reserve Bank Governor Shaktikanta Das informed that India is discussing with South Asian countries the use of the rupee for cross-border trade. The governors of the Reserve Bank have said that Bhutan and Nepal are trying to use India’s ‘UPI’ facility to a greater extent. While the pilot project of the Digital Rupee (Central Bank Digital Currency-CBDC) is going on and the Reserve Bank is looking at it very carefully, Shaktikanta Das has expressed the belief that Digital Rupee can also be used for India’s trade with South Asian countries in the future.

Shaktikanta Das was speaking at a program organized by the International Monetary Fund. The Governor of the Reserve Bank pointed out that the South Asian region, led by India and Bangladesh, accounts for 15 per cent of global economic growth. In such a situation, due to Corona epidemic, inflation, financial market crisis and the Russia-Ukraine conflict, South Asian countries have faced huge challenges. Shaktikanta Das claimed that to deal with these shocks to economies, it is important to reduce inflation, adopt credible fiscal policies, intervene at the right place on the supply front and take appropriate steps at fiscal, commercial and administrative levels.

Shaktikanta Das seems to have realized that while the challenges facing the South Asian countries are steep, the importance of these countries’ trade with India has increased enormously. Das highlighted the ongoing efforts by saying that India is discussing using the rupee for cross-border trade with neighbouring countries in South Asia. Some countries are preparing for this. Earlier, India prepared to do business with Russia in Rupee-Ruble. Not only this, there were reports that Sri Lanka was also discussing fueling with Russia in Indian rupees. Bangladesh also seems to have adopted a favourable stance towards doing business with the Indian rupee. The UAE and Saudi Arabia have also indicated their interest in doing business with the rupee.

The position of the US dollar as an international currency is under threat. Economists have warned that the US is using its dollar as a political weapon and that the sanctions imposed by the US on Russia after the Ukraine conflict endanger the dollar’s position as an international currency. To reduce its dependence on the US dollar, Russia has shown its willingness to trade in its ruble and other countries’ currencies, which is getting a good response. Other countries, alarmed by these reckless US policies, are also taking steps to use their currency more in international trade. At such a time, India is preparing to use the rupee as a global currency, which is an interesting fact.

Given the background of ongoing geopolitical upheavals, major challenges are facing the economies of almost all the world’s major countries. But in such a time, the Indian economy is progressing rapidly. International investors are investing heavily in India. Due to this, India’s credibility has increased and other countries are convinced that using rupees will be safe.

Due to all these factors, many countries are showing readiness to do business with Indian Rupee and for this, it seems that the Reserve Bank has also made the necessary changes in its policy. If India and South Asian countries start using the rupee for cross-border trade, it can positively message the world.

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