China has declined India’s proposal to carry out bilateral trade in local currencies. This proposal was made to bridge the ballooning trade deficit with the neighbouring country, an official said.
If reports are to be believed, India’s exports to China stood at only USD 13.4 billion, whereas, imports aggregated to USD 76.4 billion in 2017-18, leaving a trade deficit of USD 63 billion. In 2016-17, the deficit was USD 51.11 billion. India had then suggested China for renminbi-rupee trade to boost its exports and tackle the widening trade deficit concern.
The official said, “They have not accepted the proposal.” In October this year, the issue was discussed in an inter-ministerial meeting. It was suggested in the meeting, that the Reserve Bank of India and the Department of Economic Affairs would look at the possibility of exploring renminbi-rupee trade with China.
Apart from China, India has also proposed trade in national currencies with some other countries, including Russia, Iran and Venezuela.
Biswajit Dhar, professor at Jawaharlal Nehru University said, “This will help in bridging trade deficit with countries like China,” Gupta said. Trade experts have stated that bilateral trade in domestic currencies will help India only in the case of those countries with which it has a trade balance. “Trade imbalance should not be there with the country with which we want to do trade in rupee. It will not help in bridging the deficit. The partner country should have an opportunity to invest in India to use the rupee.”
Earlier also, the Indian industry and exporters have raised the issue of increasing trade deficit with China and have asked the government to seek greater market access for domestic goods in the Chinese market. Though, recently China has permitted exports of rice and sugar but India wants to increase its export quantities, including pharmaceuticals, engineering and services.