1 hr ago
India urges BRICS banking upgrades for local-currency trade
India wants BRICS countries to make it easier to trade using their own currencies.
It says banks need better systems and more vostro accounts to support this.
Vostro accounts help banks handle money for other banks.
BRICS officials generally support increasing local-currency trade, but they have not finalized practical steps.
Prime Minister Narendra Modi also wants the group to remove 10 major trade barriers.
He proposed creating 1,000 new business partnerships and helping 100 startups expand each year.
India says safer shipping routes and open supply chains would help trade grow.
Commerce Secretary Rajesh Agrawal said the weaker rupee may help exporters, but it can also make their costs higher.
India called on BRICS countries to strengthen banking infrastructure and expand vostro accounts for local-currency trade.
BRICS trade discussions broadly supported local-currency settlements, but officials said concrete outcomes have not yet been reached.
Prime Minister Narendra Modi proposed removing 10 major trade barriers and creating 1,000 new business partnerships across BRICS.
Modi also proposed supporting 100 BRICS startups annually as they expand into other member countries.
Commerce Secretary Rajesh Agrawal said a weaker rupee could aid exports but also increase exporters’ input costs.
- Who
- India, BRICS member countries, Prime Minister Narendra Modi, and Commerce Secretary Rajesh Agrawal.
- What
- India is seeking stronger banking infrastructure and expanded vostro accounts to facilitate trade in local currencies.
- Where
- The discussions concerned trade among BRICS countries; the World Trade Organization conference was held in Cameroon.
- When
- The proposals followed recent BRICS trade discussions and the 14th World Trade Organization ministerial conference.
- Why
- To make cross-border local-currency trade easier and expand business partnerships while addressing trade barriers and infrastructure needs.
Potential benefits
Potential risks and safeguards
Effect of a weaker rupee
Potential benefits
A weaker rupee can make Indian goods more competitive in foreign-currency terms and potentially support exports.
Potential risks and safeguards
Depreciation can raise fixed and other input costs, so its overall effect on exports cannot yet be established with available empirical data.
Plurilateral trade agreements
Potential benefits
Such agreements could complement the multilateral trading system, as stated in the World Trade Organization ministerial statement.
Potential risks and safeguards
India says these agreements should include safeguards protecting countries that are not part of them.
Key facts
- Main proposal
- Strengthen BRICS banking infrastructure and expand vostro accounts.
- Current practice
- India already settles some trade in local currencies with the United Arab Emirates and other countries.
- Trade-barrier target
- Narendra Modi called for removing the bloc’s 10 biggest trade barriers.
- Business-partnership target
- Modi proposed creating 1,000 new business partnerships among BRICS companies.
- Startup target
- He proposed supporting 100 BRICS startups annually in expanding into other member countries.
- Negotiation status
- Commerce Secretary Rajesh Agrawal said recent discussions had not produced concrete outcomes and issues remained to be finalized.
- Policy framework
- The Jaipur Consensus provides a broad framework for further BRICS trade discussions.
Sources
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