India is already using INR in trade with neighboring countries
What's the story
The Indian government has initiated trade in Indian Rupee (INR) with neighboring countries, including Sri Lanka, Nepal, Bangladesh, Bhutan, Iran, and Russia.
The Parliament was informed about this by Minister of State for Commerce and Industry Anupriya Patel while answering a question.
This move towards INR-based trade settlements with neighboring countries not only strengthens regional ties but also reduces reliance on the US Dollar.
Details
New mechanism launched for India-Bangladesh trade
A significant portion of India-Nepal trade is conducted in INR, promoting regional trade and decreasing dollar dependence.
Meanwhile, India and Bangladesh launched a new mechanism on July 11, 2023, to settle trade in INR.
Two banks from each country—SBI and ICICI Bank from India and Sonali Bank PLC and Eastern Bank Ltd from Bangladesh—have been designated for this purpose.
What Next?
Sri Lanka recognizes INR as a designated foreign currency
Sri Lanka now recognizes INR as a designated foreign currency and authorized dealer banks in India have opened rupee vostro accounts for eight Sri Lankan banks, facilitating trade settlements between the two nations.
All bilateral trade between India and Bhutan is in INR. Meanwhile, a "Rupee trade mechanism" has been initiated by India to facilitate trade with Russia.