India Pushes Rupee Trade Settlement to Help Partners Short of Hard Currency
The Union Finance Minister said India wants to promote settling trade in rupees. This would help partner countries that are short of hard currency (widely accepted currencies like the US dollar or euro) keep importing essential goods from India.
She said countries buying from India could pay in rupees, a method India "has understood and is working on".
She linked the need to economic slowdowns and geopolitical conflicts, including wars, which have pushed many countries into debt traps and balance-of-payments crises (when a country cannot earn or borrow enough foreign currency to pay for its imports and loans).
She said multilateral lenders took three to four years to respond to such crises, and that this delay is now being corrected.
On trade deals, she said the ASEAN-India trade agreement is "very skewed" against India. It is under review, and India wants to continue it in a "slightly refashioned" form.
She said India stayed out of the Regional Comprehensive Economic Partnership (RCEP) because it offered India nothing, though India still trades with its members.
The remarks were made in an interaction on the sidelines of the IMF-World Bank Annual Meetings in Bangkok, Thailand.
Local Currency Settlement (LCS) Mechanism and Internationalisation of the Rupee
Local currency settlement means two countries pay each other for trade in their own currencies, instead of using a third currency like the US dollar. For example, an Indian exporter can be paid in rupees by a buyer abroad, without either side first buying dollars. Internationalisation of the rupee is the wider goal of making the rupee widely used across borders for trade, investment and savings. The main tool is the Special Rupee Vostro Account (SRVA): a rupee account that a foreign bank opens with an Indian bank, through which trade payments flow.
The Finance Minister's call to "settle in rupee" builds directly on this framework. For a partner country facing a dollar shortage, rupee settlement keeps essential imports like food and medicines flowing from India, and it also helps India's long-term aim of a more international rupee.
ASEAN-India Trade in Goods Agreement (AITIGA)
The ASEAN-India Trade in Goods Agreement (AITIGA) is a trade deal between India and the ten countries of ASEAN (the Association of Southeast Asian Nations). Under it, both sides cut or remove the import taxes on most goods they buy from each other. It was signed in 2009 and is the "goods" part of the larger ASEAN-India free trade area. India is now reviewing it because its trade deficit with ASEAN grew sharply after the deal.
The Finance Minister called the agreement "very skewed" against India. India's aim in the review is not to end the deal, but to "refashion" it with tighter rules of origin and better market access so that Indian importers, manufacturers and markets are protected.
Regional Comprehensive Economic Partnership (RCEP)
The Regional Comprehensive Economic Partnership (RCEP) is a free trade agreement among 15 countries of the Asia-Pacific: the ten ASEAN members plus China, Japan, South Korea, Australia and New Zealand. Its members remove import taxes on most goods traded among them and follow common trade rules. India was part of the talks from the start but walked out before the deal was signed.
The Finance Minister said RCEP offered India nothing and joining would not have been in its favour. Her remarks show India's current approach: build bilateral deals and reshape older agreements like AITIGA, instead of joining a regional bloc where China is the biggest economy.
- RBI rupee trade settlement (SRVA) framework: 11 July 2022
- India-UAE Local Currency Settlement System: 15 July 2023; first rupee crude oil payment: August 2023
- SRVAs without prior RBI approval: from August 2025
- AITIGA: signed 13 August 2009, in force 1 January 2010; review began May 2023
- RCEP: 15 members; signed 15 November 2020; in force 1 January 2022
- India left the RCEP talks: 4 November 2019, Bangkok
- The remarks were made on the sidelines of the IMF-World Bank Annual Meetings, Bangkok, October 2026