Sanjay Budhia
An industry official said on Sunday that India and Bangladesh launching cross-border trade settlement in Indian rupees (INR) will stimulate two-way commerce by lowering transaction costs.
National EXIM Committee of the CII Sanjay Budhia stated that because all exports and imports and trade transactions under this arrangement may be denominated and invoiced in INR, this would reduce reliance on the US Dollar and address issues such as a lack of forex reserves, addition to strengthening regional currency and trade.
Bangladesh and India began trading in rupees in July, to reduce reliance on the US dollar and bolster regional currency and trade.
This is the first time Bangladesh has conducted bilateral trade with a country other than the United States.
“This would certainly promote the growth of trade between the nations and support the increasing interest of the global trading community in INR”, Budhia said, adding that the transaction costs during trade between the countries would be reduced, boosting Indian exports to Bangladesh.
“Bangladesh is now confronting a shortage of forex reserves, and the provision of trade settlement in INR will substantially assist in alleviating the situation, resulting in an increase in import needs from India”, he said.
“Trade settlement in INR reduces exchange rate uncertainty for Indian businesses by eliminating the need to use USD before executing financial transactions, and it would have a similar effect on Bangladesh”, he noted.
“This will go a long way towards further enhancing the already significant economic relations between India and Bangladesh through economically efficient cross-border transactions”, Budhia continued.
Furthermore, he proposed the establishment of a technology fund through which the government might fund R&D and innovation projects, with the private sector contributing 60% and the fund providing 40%.
“Industry could consider sending business delegations to Bangladesh to better understand the market. Large enterprises could also assist smaller entrepreneurs on their path to export excellence”, he added.
Cotton, spices, agricultural products, leather, textiles, gems, jewelry, iron and steel, and chemicals are among the important sectors that will gain from the expansion.
Bangladesh is India’s largest South Asian commercial partner, and India is Bangladesh’s second-largest trade partner.
Banks in Bangladesh and India have been granted authority to operate nostro accounts, which are accounts in another nation used for foreign currency transactions.
According to official Dhaka data, Bangladesh’s exports to India total USD 2 billion, while Bangladesh’s imports from India total USD 13.69 billion.
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