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New Delhi: In its attempt to take the rupee global, India is in talks with Lesotho to conduct trade using the Indian currency, persons aware of the matter told Mint. This development is a key step in India’s broader economic strategy to enhance its presence in southern Africa, including ongoing trade negotiations with the Southern African Customs Union (SACU).
As things stand, around 22 countries have so far set up special bank accounts to trade in Indian rupee, including Malaysia, Sri Lanka, Germany, Maldives and the UK.
India and SACU, a five-nation grouping of Botswana, Eswatini, Lesotho, Namibia and South Africa, began trade talks in 2007, which had stalled.
Negotiations have gained momentum in 2023, Mint reported earlier.
Spokespersons of the ministry of external affairs and the high commission of Lesotho in New Delhi didn’t respond to emailed queries.
Recently, Rajkumar Ranjan Singh, Minister of State in the ministry of external affairs, highlighted the growing global interest in rupee trading. The Reserve Bank of India’s initiative to allow transactions in domestic currencies aims to bolster global trade, focusing on Indian exports and leveraging the increasing global interest in the rupee, Singh had told the Lok Sabha.
“This mechanism will allow businesses to directly trade in Indian rupee, thereby reducing risks related to dependence on hard currencies. It would be a mutually beneficial mechanism for both countries in terms of saving each other’s foreign exchange reserves,” he had added.
Trading in domestic currency aligns with India’s goal to elevate the rupee to a hard currency status.
Sanjeev Sanyal, a member of Prime Minister Narendra Modi’s Economic Advisory Council, had earlier told Mint that the rupee’s hard currency status would lead to its inclusion in the International Monetary Fund’s special drawing rights basket, potentially lowering India’s financing costs.
Meanwhile, trade between India and Lesotho remains modest, although the south African nation is included in India’s Duty-Free Tariff Preference scheme. Trade cooperation between the two countries was first announced during the India-Africa Forum Summit in 2008.
India’s efforts in Lesotho have primarily focused on developing small industries, ensuring food security, and providing vocational training.
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Published: 18 Dec 2023, 06:34 PM IST
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