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News Destination For The Global Indian Community

News Destination For The Global Indian Community

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Russian Vostro accounts in India stands at a crossroad

Russian Vostro accounts in India stands at a crossroad

In April 2022, when Russia invaded Ukraine resulted in economic disruption all around the world, the downfall of the tech sector in America, and global inflation somewhere attract global attention towards the need for a substitute for the dollar as a global currency. As a response to respective incidents, India made a policy to shift its foreign transaction from the dollar to domestic and local currencies. In the series of actions, India demonstrates a 'Special Rupee Vostro Account 'with Malaysia in April 2023, as Malaysia is 16th largest trading partner of India. India also commenced talks with Russia for the same. But Russia adjourned the talks of trade in the rupee with India. Russia claims that its share of India in global trade is just 2% in merchandise and 4% in services. Such an agreement results in a $40 billion deficit to Russia. So the talks have been suspended by Russia. 

However, it was a golden opportunity for India as India's imports of crude oil from Russia has been a significant rise of 33.4% in April 2023. Russia is a major exporter of defense equipment to India. It is actually an admonishing incident for India to encourage export potential. This policy of India to trade in local currencies can be considered as a compere of future global trade structure. 

As India has intended to achieve 10% share in global export. The New FTP aims to $2 trillion target of foreign trade by 2030. In order to accomplish all the respective objectives India needs to explore its export potential. A stable market condition and an incentivized economic structure facilitate to set up CEPA (Comprehensive Economic Partnership Agreement) and free trade bilateral agreements with nations. Appropriate implementation of planned and designed policies is vital to gain prosperity back and making happen rupee a global currency for international trade. 

The writer is a student of Masters in Economics.

 

Russian Vostro accounts in India stands at a crossroad

Russian Vostro accounts in India stands at a crossroad

In April 2022, when Russia invaded Ukraine resulted in economic disruption all around the world, the downfall of the tech sector in America, and global inflation somewhere attract global attention towards the need for a substitute for the dollar as a global currency. As a response to respective incidents, India made a policy to shift its foreign transaction from the dollar to domestic and local currencies. In the series of actions, India demonstrates a 'Special Rupee Vostro Account 'with Malaysia in April 2023, as Malaysia is 16th largest trading partner of India. India also commenced talks with Russia for the same. But Russia adjourned the talks of trade in the rupee with India. Russia claims that its share of India in global trade is just 2% in merchandise and 4% in services. Such an agreement results in a $40 billion deficit to Russia. So the talks have been suspended by Russia. 

However, it was a golden opportunity for India as India's imports of crude oil from Russia has been a significant rise of 33.4% in April 2023. Russia is a major exporter of defense equipment to India. It is actually an admonishing incident for India to encourage export potential. This policy of India to trade in local currencies can be considered as a compere of future global trade structure. 

As India has intended to achieve 10% share in global export. The New FTP aims to $2 trillion target of foreign trade by 2030. In order to accomplish all the respective objectives India needs to explore its export potential. A stable market condition and an incentivized economic structure facilitate to set up CEPA (Comprehensive Economic Partnership Agreement) and free trade bilateral agreements with nations. Appropriate implementation of planned and designed policies is vital to gain prosperity back and making happen rupee a global currency for international trade. 

The writer is a student of Masters in Economics.

 

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