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World seeks to trade in Indian currency: UAE central banks discussions on rupee-dirham trade; Myanmar in queue

India and the UAE already implemented a free trade agreement (FTA) in May last year to give a boost to bilateral trade and economic ties.

Edited By: Ajeet Kumar @Ajeet1994 New Delhi Published on: June 12, 2023 18:41 IST
Union Minister Piyush Goyal and UAE Minister of State for
Image Source : PTI Union Minister Piyush Goyal and UAE Minister of State for Foreign Trade H.E. Thani Al Zeyoudi

Discussions between the central banks of India and UAE on promoting bilateral trade in the rupee and dirham to reduce transaction cost is progressing at a "very" fast pace, Commerce and Industry Minister Piyush Goyal said on Monday. As the top leaders of both countries are decisive, so one "can imagine good outcomes very soon" on this, he added.

India and the UAE already implemented a free trade agreement (FTA) in May last year to give a boost to bilateral trade and economic ties. The central banks of both countries are discussing the standard operating procedures and modalities.

These talks were started in March 2022, and now "it is about a year since then, but both the countries have made significant progress," Goyal told reporters in New Delhi. The RBI and the Central Bank of the UAE have been in a "very active" dialogue, and the finance ministry here is also "very" supportive and handling the entire issue, he said.

"I am sure that given the high level of engagement on both sides, not only on Rupee-Dirham trade but also on other digital technologies becoming part of the India UAE framework. I think we have very good things, which will be offered to both the nations in the coming months," he added. When asked about the timeline for this, he said the talks are "progressing at a very fast pace".

Goyal also said that as far as dirham-rupee bilateral trade is concerned, currently, both sides are looking at trading between the two countries only. "Once that gets operationalised, we will see whether there is a potential to expand that further," he added.

Myanmar wants Rupee-Kyat trade arrangement by June-end

Besides, Dubai, Myanmar Commerce Minister U Aung Naing Oo expressed hope that a Rupee-Kyat trade arrangement between the two nations is finalised by June-end. Oo said trade volume between the two countries will double once the arrangement is worked out as Myanmar which has been hit by US sanctions is unable to earn sufficient foreign exchange to import goods from its trade partners.

"We are suffering from US sanctions since 2021 and it is becoming difficult to settle payment transactions with other countries in dollars", he said at an event organised by EEPC India. Under the special arrangement, Myanmar will accept Rupee payments for all its exports to India and use that rupee hoard to import from here.

To facilitate this, RBI has appointed Punjab National Bank (PNB) to open a special Vostro account for foreign trade with Myanmar. PNB in turn has approached two banks in Myanmar where these accounts will be opened.

The minister said "Negotiations between PNB and the Central Bank of Myanmar are going on and are expected to be completed by this month. Once this arrangement becomes operational, trade volume between the two countries will double".

Oo said India is the eleventh largest investor in Myanmar with $ 775. 11 million worth of investments. He said India also was one of the main trading partners of Myanmar in the previous fiscal year.

Myanmar’s major imports from India include pharmaceuticals, petroleum products

India had exported USD 820 million worth of goods to its eastern neighbour and imported goods worth USD 540 million. Top exports from Myanmar to India include metal ore, natural rubber, plywood, fish, lentils and garments.

Myanmar’s major imports from India include pharmaceuticals, petroleum products, chemicals, machinery, coffee and tea. India accounts for five per cent of Myanmar's international trade, he said. Myanmar has already put in place similar trading arrangements with China and Thailand.

"We are going for this special arrangement with neighbouring countries to reduce our dependence on dollars,” Oo added. The minister also said that Myanmar Central Bank and the RBI have mutually agreed in principle on a Rupee-Kyat payment system and standard operating procedures (SOP) to support this has been negotiated in line with the foreign exchange policies of both countries.

(With inputs from agencies)

Also Read: Drunk man molests air hostess on Dubai-Amritsar flight, arrested

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