NEW DELHI (Reuters): India has urged Myanmar’s administration to speed up the process of trade settlements through mutual currencies, a mechanism that was earlier agreed, an exporters’ body official said on Monday.
A delegation of Indian exporters met Myanmar’s trade minister U.Aung Naign Oo, who is on a visit to India, in the eastern city of Kolkata and raised the issue.
“Myanmar’s minister has assured the new mechanism would soon be operational,” P.K. Shah, former chairman of the Engineering Export Promotion Council, told Reuters after the meeting.
Myanmar, which is facing shortages of foreign exchange reserves, announced last year that it would soon start accepting Indian rupees, along with Thai baht and China’s renminbi as an official settlement currency to cut its dependence on the U.S. dollar.
The arrangement would help the export of pharmaceutical and manufacturing items from India as well as higher imports like pulses, timber and other products from Myanmar, exporters said.
Shah said trade between the two countries would significantly rise from current level of $1.8 billion once the new trade mechanism through local currencies was activated.
Reserve Bank of India, the central bank, had earlier authorised the state-run Punjab National Bank to open a special rupee vostro account (SRVA) for foreign trade settlements with Myanmar.
Under the mechanism, Myanmar would accept payments for all its exports to India in Indian rupee and the same export earnings could be used to make payments for goods and services imported from India, EEPC said.
It said PNB approached Myanmar’s CB Bank and UAB Bank of Myanmar to open a vostro account for trade settlements in Indian rupees and Kyat, Myanmar’s local currency under the special arrangement.
But the Myanmar government wanted to involve other banks in the new mechanism.
“A decision could soon be announced to activate the agreed mechanism,” Shah said.