India and Sri Lanka have stepped up talks to proceed with trade in Indian Rupee (INR) as New Delhi and Colombo look set to expand their bilateral cooperation in the “power and energy sector and aspects relating to Rupee trade”.
A Cabinet rank official in Indian Prime Minister Narendra Modi’s administration, Dr. Pramod Kumar Mishra, met Sri Lanka’s High Commissioner Milinda Moragoda in New Delhi on Friday to continue the bilateral dialogue between the two South Asian neighbours on a number of issues, including debt restructuring matters crucial for Colombo’s economic recovery.
“The High Commissioner stressed the vital role that economic integration between the two countries could play in Sri Lanka’s economic recovery,” an official media release stated. India, along with Japan and the Paris Club are engaged in talks on debt restructuring for Sri Lanka.
“High Commissioner Moragoda also followed up Dr. Mishra on a range of issues pertaining to the bilateral relationship that had been discussed during their last meeting in February,” the release stated, while referring to a previous round of bilateral talks between New Delhi and Colombo that addressed India’s support for Sri Lanka’s economic recovery alongside other matters of bilateral cooperation.
“The matters discussed included further economic integration between Sri Lanka and India, enhancing Indian investments and tourism in Sri Lanka, ways and means to further promote bilateral trade, cooperation in power and energy sector and aspects relating to the Rupee trade,” the release stated.
Several banks in Sri Lanka have opened special INR trading accounts, called Vostro accounts. This means that Sri Lankan citizens can now hold $10,000 (INR 826,823) in physical form and for transactions with their Indian counterparts, they can use INR instead of US dollars.
India’s Prime Minister Narendra Modi’s administration since July 2022, has been exploring the possibility of bringing countries that are short of dollars, into its Rupee settlement mechanism. Designating the INR as a legal currency in Sri Lanka has provided Sri Lanka much-needed liquidity support to help tide over its economic crisis amid inadequate availability of the US dollar. Meanwhile, India’s Finance Ministry has asked the Indian Banks Association (IBA) and the Federation of Indian Export Organisations (FIEO) to proceed with an awareness campaign to raise awareness among stakeholders about INR trade. Several countries wary of US sanctions on Russia have also approached India to explore settling their dues in INR. - WION