India and Saudi Arabia Discuss Settling Trade in Local Currencies
India and Saudi Arabia have begun discussions on settling their trade in local currencies, officials from the external affairs ministry said on September 11.
The talks are still in the early stages, but both sides have expressed interest in the idea. India is the second-largest trading partner of Saudi Arabia, and Saudi Arabia is the fourth-largest trading partner of India.
Settling trade in local currencies would help to reduce the volatility of exchange rates and make it easier for businesses to trade with each other. It would also help to reduce the reliance on the US dollar, which is the currency that is most commonly used in international trade.
India has been pushing for the use of the rupee in global trade for some time. In July 2022, the Reserve Bank of India announced the setting up of a mechanism to settle global trade in rupees. However, the mechanism has not yet been used.
The discussions between India and Saudi Arabia are a positive development. If they are successful, it could pave the way for other countries to also settle trade in local currencies. This would be a major step towards a more stable and efficient international trading system.
In addition to discussions on settlement of trade in local currencies, External Affairs Secretary Sayeed said India and Saudi Arabia have also agreed to expedite the negotiations on the India-Gulf Cooperation Council Free Trade Agreement and strengthen co-operation in the fintech space.
Further, the two countries have identified several sectors for co-operation. These include energy, defence, security, education, technology, transportation, health care, tourism, culture, space, and semi-conductors.
The talks between India and Saudi Arabia are a sign of the growing strategic partnership between the two countries. They are also a reflection of the increasing importance of the Gulf region to India’s economy.
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