India and Bangladesh trade settlement in rupee will boost bilateral commerce: Sanjay Budhia

economictimes.indiatimes.com:

India and Bangladesh commencing cross-border trade settlement in Indian rupee (INR) would promote two-way commerce by reducing transaction cost, an industry official said on Sunday. CII national committee on EXIM Sanjay Budhia said that since all exports and imports and settlement of trade transactions under this arrangement may be denominated and invoiced in INR, this would also reduce dependence on the US Dollar and would address situations like scarcity of forex reserves apart from strengthening regional currency and trade.

In July, Bangladesh and India launched trade transactions in rupees with the aim of reducing dependence on the US dollar and strengthening regional currency and trade. This is the first time Bangladesh has done bilateral trade with a foreign country in addition to the US dollar.

«This would certainly promote the growth of trade between the nations and support the increasing interest of the global trading community in INR,» Budhia said adding due to this arrangement, the transaction costs during trade between the countries will reduce which will boost the Indian exports to Bangladesh. Bangladesh is currently facing scarcity of forex reserves and the provision of trade settlement in INR would greatly help address the situation resulting in increase in import demands from India, he said.

Trade settlement in INR alleviates exchange rate uncertainties for Indian enterprises by obviating the necessity of using USD in advance of conducting financial transactions and it would have similar effects on Bangladesh too, he added. «This will go a long way in further enhancing the already significant economic relations between India and Bangladesh through economically efficient cross-border transactions,» Budhia