India discusses potential for local currency trade settlement with Vietnam

India has been looking to encourage the use of the Rupee to settle international trade transactions.

India discussed the potential for a bilateral currency trade settlement with Vietnam during the Joint Trade Sub-Commission (JTSC) in New Delhi on August 8.

"The Indian side highlighted the potential in service sector cooperation and suggested cooperation in IT, financial services, education sector, tourism, healthcare, tele-medicine, medical tourism and start-up ecosystem," an official statement on the deliberations said, adding that Mutual Recognition Agreements (MRAs) on professional services, internationalisation of RuPay card and QR-based payment system also featured in the suggestions from the Indian side.

New Delhi has already signed a memorandum of understanding (MoU) last month with the UAE to use the rupee and the dirham to settle bilateral transactions and a local currency settlement plan was also discussed with Indonesia during talks between the two sides on the sidelines of the meeting of G20 Finance Ministers and Central Bank Governors in Gandhinagar in mid-July.

India has been looking to encourage the use of the rupee to settle international trade transactions and is banking on local currency settlement pacts to push for greater acceptance of INR.

Also read: Exclusive: Brazil, South Africa may be next in line for India’s bilateral currency settlement plan

Vietnam, India's fifth largest trading partner among Association of Southeast Asian Nations (ASEAN) countries accounts for 11.2 percent of New Delhi's total trade with ASEAN during 2022-23. "Vietnam is an important destination for India’s iron & steel and agricultural and animal products mainly meat products, animal fodder, cereals and marine products," the statement said.

Identifying agriculture, fisheries, textiles, footwear, pharmaceuticals, chemicals, and fertilizers, among others as key sectors for expanding trade cooperation, both sides agreed to work together to resolve market access issues and technical barriers faced by the exporters through regular and sustained bilateral discussions.

"Both sides reviewed the progress on bilateral trade and economic cooperation and discussed ways to unlock the vast untapped potential in bilateral trade to enable the business communities from the two sides to benefit from the partnership of two of the fastest growing economies," the statement said.