India exploring trade in local currencies with Tanzania
Oct 09, 2023
New Delhi [India], October 9 : India is exploring trade in local currencies with Tanzania, said Dammu Ravi, Secretary (Economic Relations) in the Ministry of External Affairs on Monday at a presser.
"We are exploring new areas of cooperation including in trade in local currencies. This is one of the topics discussed by the two leaders," Ravi told reporters in the national capital.
Earlier in the day, the joint statement which was released after the two leaders' meeting mentioned that the two leaders expressed the desire to expand bilateral trade using Local currencies.
They noted that the Reserve Bank of India (Indian Central Bank) has cleared the way for trade using local currencies -- Indian Rupee (INR) and Tanzanian Shilling by allowing the authorized banks in India to open Special Rupee Vostro Accounts (SRVA) of correspondent banks of Tanzania and that transactions using this mechanism have already materialised.
"The two sides agreed to continue with the consultations in order to address any concerns so as to ensure the sustainability of this arrangement," the joint statement read.
Banks from several countries have opened special Rupee vostro accounts in Indian banks in order to trade in local currencies. Simply put, vostro accounts enable domestic banks to provide international banking services to clients who have global banking needs. The Reserve Bank of India last year put in place an arrangement, allowing transactions in domestic currencies to promote the growth of global trade with an emphasis on exports from India and to bring in increasing interest towards the rupee.
At the invitation of President Droupadi Murmu, Tanzania's President Samia Suluhu Hassan is on a state visit to India. President Hassan was accompanied by a high-level delegation.
With a view to further strengthening the bilateral relations and expanding cooperation across various sectors, the two leaders announced the elevation of the Indo-Tanzania relationship to the level of 'Strategic Partnership'. Both sides noted that the strategic partnership will help the two countries to jointly work on issues like Maritime Security, Defence Cooperation, Development Partnership, Trade and Investment among others.
India remains a major destination for Tanzanian cashew nuts, pigeon peas, spices, avocado and other agricultural commodities. Both sides agreed to further revitalise cooperation in this sector.
Both countries have a bilateral trade of USD 6.4 billion, of which India's exports alone amount to USD 3.9 billion and imports worth USD 2.4 billion in 2022-23. India is the fifth largest investor in Tanzania with about USD 3.7 billion in investments covering a range of sectors.
