New Delhi: Foreign Secretary Vinay Kwatra said on Thursday that discussions on trade settlements in national currency have been very positive within the BRICS framework.
During a special briefing by the Ministry of Foreign Affairs on the Prime Minister’s visit to South Africa, Kwatra said that BRICS nations have been discussing for quite some time how to put in place a mechanism through which each of BRICS countries can at least start doing trade settlements in the national currencies.
“Conceptually, he added, “Trade settlement in national currency, we have already started working on it, not just as a discussion or a talking point but also on the ground cooperation.”
“We are also pursuing trade settlements in national currency with several other countries. So, if it becomes a point of highly advanced discussions in the BRICS and the BRICS countries agree to do trade settlement in national currency, something which is of a great promise within BRICS,” Kwatra added.
However, he said it is each country’s decision to do trade settlement in the national currencies, and not just the BRICS’s decision. “The reason behind that is there is an extensive universe of regulatory frameworks that you need to put in place before you do trade settlement in national currencies…,” he said.
Kwatra said, “Discussions have been very positive and constructed within the BRICS framework, now each country progresses on that is something for each country to decide.”
So far as the BRICS common currency is concerned, he said, “You can look at BRICS currency as a common currency… Common currency as a conceptual framework that requires a large degree of pre-requisite steps before you even begin to discuss them.”
Currently, the BRICS mechanism and its leaders are focused principally on national currency trade settlements and not on anything else with regard to this aspect, he added.
India has recently started taking strong steps in trying to put structures in place before trade settlements in national currencies.
Furthermore, Kwatrea put light on the India-Dirham rupee trade settlement mechanism with the United Arab Emirates.
“Most recently, a couple of months ago, we signed the India-Dirham rupee trade settlement mechanism with UAE. Now, India’s trade with UAE is roughly 90 billion dollars, more or less balanced. It opens up a good opportunity for both India and the UAE to explore that space,” he said.
The two leaders Sheikh Mohamed bin Zayed Al Nahyan, President of the UAE and PM Modi on July 15 witnessed the exchange of MoUs between the Reserve Bank of India and UAE Central Bank for the establishment of a framework to promote the use of local currencies (INR-AED) for cross-border transactions and another one for the bilateral cooperation on interlinking their payment and messaging systems.
“India and the UAE have been pioneers, whether it was the Comprehensive Economic Partnership Agreement (CEPA) or the Rupee-Dirham trade mechanism. When we signed the CEPA it was the first CEPA ever for the UAE and India’s first ever CEPA for any country in the Middle East”, said the Indian envoy in an interview with ANI.
The signing of the Local currency settlement (LCS) agreement took place during the recent visit of Prime Minister Narendra Modi to the UAE.