India, Egypt hold talks on trade deal in national currencies | Latest News India

New Delhi

Sources familiar with the matter said India and Egypt, both Brics members, have entered into negotiations for a trade deal in national currencies at a time when the issue has become a focal point for the group.

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This development also comes at a time when the two countries aim to almost double bilateral trade to 12 billion dollars by 2028. Various rounds of talks have been held between the two parties on the agreement and both parties want to conclude this agreement as soon as possible. The people mentioned above said the following on condition of anonymity as much as possible.

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“There is no time frame to reach an agreement, but both sides want the agreement to happen as quickly as possible. One of the people mentioned above will help facilitate bilateral trade, which has grown in recent years,” he said.

India has allowed trade in national currencies under its new Foreign Trade Policy (FTP) 2023, a second person aware of the development said.

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“Arrangements for special rupee vostro accounts (SRVAs) have been made with nearly two dozen countries to facilitate trade in local currencies, and discussions are ongoing with many other trading partners, including Egypt,” the second person said.

The Reserve Bank of India (RBI) has introduced an alternative arrangement for invoicing, payments and payments for exports and imports in Indian rupees from July 2022. Based on bilateral agreement, banks of many countries have opened SRVAs in India.

A vostro account is held by a bank on behalf of a bank in another country.

Countries with SRVAs in India include Russia, Belarus, Bangladesh, Fiji, Germany, Israel, Kazakhstan, Kenya, Malaysia, Maldives, Myanmar, New Zealand, Oman, Singapore, Sri Lanka, Uganda, United Arab Emirates (UAE) and England.

Before the Israel-Hamas conflict began, the value of India-Egypt trade was around $6-7 billion per year. Egypt approved wheat imports from India in 2022, but only 61,000 tonnes were shipped before New Delhi banned grain exports. During Egyptian President Abdel Fattah Al-Sisi’s visit to India in 2023 to attend Republic Day celebrations, the two sides discussed strengthening food and pharmaceutical supply chains and strengthening cooperation in key areas such as ICT and pharmaceuticals.

However, imports from Egypt have been severely affected by conflicts in West Asia, with imports of Egyptian goods falling 28% year-on-year to $461 million in the first five months (April-August) of the current fiscal year. . During the same period, India’s exports to Egypt increased by 5%, reaching 1.44 billion dollars.

India-Egypt trade in goods reached $7.26 billion in 2021-22; this includes Indian exports of $3.74 billion and imports of $3.52 billion. In 2022, India’s exports increased as Egypt removed non-tariff barriers (NTBs) on Indian wheat following disruption of supplies from Ukraine.

India’s exports to Egypt peaked at $4.11 billion in 2022-23, while imports from the country fell to $1.95 billion, taking bilateral trade to $6.06 billion. In 2023-24, bilateral trade fell to $4.67 billion as the Israel-Hamas conflict disrupted the transportation of goods. India exported goods worth $3.52 billion and purchased materials worth $1.15 billion in FY24.

India’s main exports to Egypt include refined petroleum products, buffalo meat, iron and steel, agricultural products and pharmaceuticals. It mainly imports crude oil, fertilizer and cotton from Egypt.

Finalizing regulations for a trade agreement in national currencies was one of the key issues discussed at the last Brics Summit in Kazan, Russia. In his briefing to the press after the summit, secretary of the ministry of external affairs (economic relations), Dammu Ravi, said that many leaders have expressed interest in settling trade through national currencies and payment mechanisms due to the global economic situation and the debt crisis that many countries are in. facing.

“This is a very specific area where the ministry of finance, especially the ministry of economic affairs, is leading. “They need a more expert-level interaction effort to concretize this event among Brics countries,” he said.

The issue was also included in the Kazan Declaration, issued after the summit, in which the leaders of the Brics states tasked finance ministers and central bank governors to continue to consider the use of national currencies, payment instruments and platforms.