Commerce and Industry Minister Piyush Goyal and his Bangladeshi counterpart Tipu Munshi discussed the settlement of transactions in Indian rupees in New Delhi on Thursday. The two countries are also likely to sign a free trade agreement (FTA) in the near future.
“A joint feasibility study on a Comprehensive Economic Partnership Agreement (CEPA) was carried out after the two countries agreed to consider a bilateral FTA,” the trade ministry said.
Under CEPA, the two countries will significantly reduce or eliminate tariffs on the maximum number of goods traded between them. In addition, it relaxes norms to facilitate trade in services and attract investment.
India and Bangladesh have agreed to start discussions on CEPA “at an early date” as it “provides a sound basis for a significantly enhanced trade and commercial partnership.”
Other issues discussed were the removal of non-tariff barriers and the reopening of border areas, among others.
“The Ministers will advocate the removal of non-tariff barriers and port restrictions, the reopening of border ports, the harmonization and mutual recognition of standards and procedures on both sides, the settlement of trade in Indian rupees, the enhancement of connectivity, and, inter alia, the economic development of India and Bangladesh. trade infrastructure to maximize the potential of the relationship,” the ministry said.
Vivek Iyer, Partner at Grant Thornton Bharat, said: “Given India’s focus on energy security and the associated high import costs, the rupee trade is likely to benefit from the ramifications of this global change, particularly It is an effective way to mitigate the challenges faced by currency volatility and reserve changes.”Said business standard.
India’s neighbors are increasingly looking to adopt trade settlements in the Indian Rupee.
Recently, a Sri Lankan bank opened a Vostro account with the State Bank of India (SBI).
“We are delighted that a Sri Lankan bank has opened a Bostro account with the State Bank of India for bilateral transactions in Indian Rupees. and discussed this and related matters,” said the Indian. Sri Lanka’s embassy wrote on Twitter on Tuesday.
According to a previous report by iansu, India is also looking to expand its rupee trade in Africa, the UAE and Saudi Arabia. India and the United Arab Emirates have already started talks on the Rupee Settlement Mechanism.
Bilateral trade between India and Bangladesh increased from $10.8 billion in 2020-21 to $18.2 billion in 2021-22 (exports of $16.2 billion and imports of $2.0 billion).
Bangladesh is India’s largest trading partner in South Asia. India is Bangladesh’s second largest export partner, accounting for 12% of her total. China holds 21.5% of her share and is Bangladesh’s largest export partner.