India, Myanmar Explore Local Currency Trade To Boost Bilateral Relations

India and Myanmar are taking steps to enhance their economic partnership by discussing the use of local currencies—rupee and kyat—for bilateral trade. 

The dialogue took place during a meeting between Indian Commerce and Industry Minister Piyush Goyal and Myanmar’s Minister of Investment and Foreign Economic Relations, Kan Zaw, at the 12th East Asia Summit Economic Ministers' Meeting in Vientiane, Laos.

Goyal shared insights on potential cooperation in various sectors, including lentils, diesel, gasoline, and electric vehicles, and stressed the advantages of a Rupee-Kyat currency mechanism to facilitate smoother trade transactions. In the fiscal year 2023-24, the total trade between the two nations reached USD 1.75 billion. However, India's exports to Myanmar saw a decline, dropping from USD 807 million to USD 670.4 million, while imports rose from USD 954.74 million to USD 1.07 billion.

This initiative is part of India’s broader strategy to promote trade in local currencies with several countries, including the UAE, African nations, and Russia, aiming to reduce transaction costs by eliminating the need for currency conversion. The Reserve Bank of India introduced a system for settling international trade transactions in Indian Rupees in July 2022 to support countries grappling with foreign exchange shortages.

To streamline the import process, particularly for pulses such as tur and urad, the Indian government has eased payment mechanisms for traders importing from Myanmar. Importers are now encouraged to utilise a direct payment system through a Special Rupee Vostro Account managed by Punjab National Bank.