Neighbouring Sri Lanka and Bangladesh are keen to start trading with India in rupees immediately. In response to this, the Reserve Bank of India has instructed major state-owned refiners to urge Persian Gulf suppliers to accept at least 10% of oil payments in rupees. This move by India is aimed at reducing its dependence on the US dollar and mitigating the impact of fluctuating exchange rates on its economy. The willingness of several developed and developing countries, including Bangladesh, Sri Lanka, and nations in the Gulf region, to trade in rupees signifies a potential game-changer in international trade.

India Asks State Refiners to Pay for Some Oil Imports in Rupees

The Reserve Bank of India has taken a significant step to strengthen the use of the Indian rupee in international trade. In an effort to reduce the country’s reliance on the US dollar, the central bank has instructed major state-owned refiners to encourage their Persian Gulf suppliers to accept a minimum of 10% of payments for oil imports in rupees. This move is in response to the growing interest from neighboring countries such as Sri Lanka and Bangladesh, as well as other nations in the Gulf region, to engage in trade with India using the Indian rupee. By diversifying its trade currency options, India aims to increase stability, reduce foreign exchange risks, and strengthen its economic ties with these countries.

The push for rupee-denominated payments in the oil trade is part of India’s broader efforts to de-dollarize its economy. By minimizing dependence on the US dollar, India can gain greater control over its economic policies and reduce vulnerability to global currency fluctuations. This move aligns with the growing de-dollarization efforts within the BRICS economic alliance, which includes Brazil, Russia, India, China, and South Africa. Additionally, accepting rupees for oil imports can facilitate easier trade for countries that share close economic ties with India, particularly in the South Asian region.

India’s bold move to reduce dollar dependency in oil trade has garnered significant interest from countries willing to start trading with India in rupees. Bangladesh and Sri Lanka, two neighboring countries, are among those expressing enthusiasm to engage in trade using the Indian rupee. This could potentially open new avenues for economic cooperation and boost bilateral trade between India and these nations. Moreover, the interest from Gulf countries further demonstrates the desire of developing economies to diversify their trade relationships and explore alternative payment currencies. While the adoption of the Indian rupee as a trade currency may bring challenges in terms of stability and liquidity, it presents an opportunity for India to assert itself as a major player in the international trade arena.

Summary:

Neighboring Sri Lanka and Bangladesh express interest in trading with India in rupees.

The Reserve Bank of India instructs state-owned refiners to advocate for rupee payments for oil imports.

India aims to reduce dependence on the US dollar and mitigate currency risks.

Various countries, including Bangladesh, Sri Lanka, and Gulf nations, are keen on rupee trade.

This move aligns with the de-dollarization efforts of the BRICS economic alliance.

Sources:

Livemint

NDTV

Business Standard