Informist, Thursday, Jul 20, 2023
By Priyasmita Dutta and Pratiksha
NEW DELHI – After the United Arab Emirates, Indonesia will soon link its fast payment system with India to enable cross-border payments through the Unified Payments Interface and its Indonesian counterpart, said Chanchal Sarkar, co—chair of G20 Global Partnership for Financial Inclusion.
"The memorandum of understanding has already been signed. We need to work further, so as and when both sides are ready," Sarkar, also economic advisor in the Department of Economic Affairs, told Informist when asked about the timeline of the launch.
"The new dialogue has also been launched day before yesterday with the two ministers, our finance minister and (Indonesian finance minister) Mulyani Indrawati. So, I expect this (the implementation) to start very soon," he said.
On Jul 16, Finance Minister Nirmala Sitharaman had launched an economic cooperation dialogue with Indonesia to strengthen trade and investment relations between the two countries. This comes at a time when India's trade deficit with Indonesia doubled to over $18 bln in 2022-23 (Apr-Mar) from $9 bln the previous year.
Indonesia is India's largest trading partner in the Association of Southeast Asian Nations, or ASEAN, region.
Once the transaction pact with Indonesia sails through, the government expects "at least a couple" of more deals to happen this year, Sarkar said.
"There are many countries that showed interest. It is expected that at least a couple of countries would be there (to sign agreement)...France is one, many African countries are also interested, Saudi Arabia and we are also talking. In fact, some of the South Asian countries are also very interested."
During his two-day visit to France, Prime Minister Narendra Modi had on Jul 14 said India's UPI could soon be used to make payments in France. A day later, the Reserve Bank of India and the Central Bank of the United Arab Emirates signed two memoranda of understanding to promote the use of local currencies – the Indian rupee and the UAE dirham – for cross-border transactions using their respective fast payment systems.
Asked about the issues related to rupee trade settlement with Russia, Sarkar said this wasn't a deterrent to India's overall trade with Russia.
In May, Russian Foreign Minister Sergei Lavrov had said his country had accumulated billions of rupees in Indian banks, which it couldn't use.
"Despite problems, today the volume (of trade) with Russia has gone up, therefore, it is not necessarily a deterrent," Sarkar said.
According to latest data, India's trade volumes with Russia have shot up over the past year, led by imports of mineral products such as crude oil, which have gone up nearly 250 times on year in Apr-May.
On Jul 14, the commerce ministry had said that India's imports from Russia stood at $16.04 bln in Apr-Jun, up from $6.91 bln in the corresponding period last year.
Russia was the first country to have started rupee trade with India. For trade settlement in rupee terms, India has a total of 20 special rupee vostro accounts with Russian banks.
Asked whether the problems that plagued Russia-India rupee trade settlement could resurface in the India-UAE rupee-dirham trade pact as well, Sarkar said it remains to be seen.
"True. It will be seen as and when it happens. At this moment, I don't think we anticipate any serious issue." End
US$1 = 82.04 rupees
Edited by Avishek Dutta
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