Approval is not required for transactions in rupees with BRICS countries…India’s big decision amid tariff dispute

New Delhi: After US President Trump’s 50% tariff was imposed, India has taken another big decision. The Reserve Bank of India (RBI) has instructed banks to allow traders to do export-import transactions with BRICS countries completely in Indian currency rupees. Vostro account will be used for this and now banks will not even need to take approval in advance.

Let us tell you that the move of the Indian government is being considered an important step towards strengthening the international role of the rupee and reducing dependence on the dollar. Especially at a time when the US has imposed a 50 percent tariff on Indian exports. Let us tell you that currently Indian traders do about 85% of foreign trade in US currency dollar, but by shifting 10 to 15 percent of transactions to rupees, the dependence on the dollar will be reduced by about $ 100 billion annually.

Let us tell you that BRICS is an inter-governmental organization, whose 10 members are India, China, Russia, Brazil, South Africa, Egypt, Ethiopia, Iran, Indonesia and United Arab Emirates. Earlier there were only 5 countries in BRICS, Brazil, Russia, India, China and South Africa, but after January 1, 2024, 5 more countries became its members. BRICS has no head office, because the head office of BRICS’ financial institution BRICS New Development Bank (NDB) is in Shanghai, China. BRICS member countries hold summits every year in turn.

Let us tell you that India is still doing business of clothing, chemicals and medicine with BRICS countries, but now the focus is on increasing the business category, especially after the Trump tariff, the Indian government can take steps in this direction. Bilateral trade can be promoted by making trade agreements with BRICS countries. India’s trade with BRICS countries has almost doubled from 2008-09 to 2023-24, but the trade deficit with China and Russia is a challenge.

To reduce the trade deficit, India is promoting trade and transactions in its currency with BRICS countries, because trading with BRICS countries gives an opportunity to strengthen its position in the international market, to attract investment. Therefore, the Government of India has taken several steps to promote trade in Indian currency with these countries.

For example, the government has given special Vostro accounts to Indian traders for trade in rupees. Apart from the BRICS countries, the trade agreements that India has made with Russia, UAE, Maldives, Malaysia, Kenya, Sri Lanka and Bangladesh, their transactions will also be in the Indian currency rupee.