India has opted to offer its Indian Rupee (INR) as a trade currency alternative to the US dollar after it unveiled its latest "dynamic and responsive" foreign trade policy in a bid for de-dollarization.
According to the Indian Commerce Secretary Sunil Barthwal, Indian Rupee will be used in trade countries that are facing a shortage of dollar or currency failure. He said trade between India and Malaysia can now be settled in INR.
“Trade between India and Malaysia can now be settled in Indian Rupee (INR) in addition to the current modes of settlement in other currencies. This follows the decision by the Reserve Bank of India in July 2022 to allow the settlement of international trade in the Indian Rupee (INR),” the Ministry of External Affairs announced.
“This initiative by the Reserve Bank of India (RBI) is aimed at facilitating the growth of global trade and to support the interests of the global trading community in Indian rupees, “ it further said.
In the unveiling of the new foreign trade policy for 2023-28, one of the main goals of the new trade strategy, according to Barthwal, is to "encourage" the internationalization of the rupee, and according to commerce and industry minister Piyush Goyal, to increase the Indian exports of goods and services to $2 trillion by 2030.
In addition, Bangladesh is also eyeing to start trading with India using INR, after the ministry of commerce placed a written recommendation at the last cabinet meeting regarding the possibility and opportunity of using rupee instead of dollar.
"The use of rupee will start with Bangladesh’s $2 billion trade with India. Bangladesh Bank has almost finished all kinds of trials in this regard. Trading in rupee will be introduced in both countries only after bilateral decision on some issues," an executive director of Bangladesh Bank said.
For Russia, Rupee trade was made as the centerpiece of the new plan as New Delhi aims for wider policy to secure a global status for the currency and allow it to be used for international trade settlement.
Currently India is trading in rupees with Russia, Mauritius, Iran and Sri Lanka.
The announcement came in amid official efforts to secure and safeguard the Indian international trade from the impact of the Ukrainian crisis.
Ever since the Russian economy was sanctioned by the West over the Ukraine crisis, trading with the US dollar as a means has become immensely difficult, hence countries have started opting for alternative currencies to break US hegemony over international trade.
Likewise, Iran had ditched the US dollar last year, and had started trading with Russia in their respective national currencies, the Iranian Rial and the Ruble, which further enabled Iran to bypass the US-dominant global financial system.
The BRICS countries, including Brazil, Russia, India, China, and South Africa, and of which Iran and Saudi Arabia would soon be a part of, are working on creating a new form of currency to kill the US hegemony.
The countries are set to present ideas on its development at the forthcoming summit of the organization in South Africa, as announced by deputy chairman of the Russian state Duma Alexander Babakov on Thursday.