7 mar 2023 1:56 p.m
In trade and tourism as well as other areas, India and Sri Lanka are striving for more economic cooperation. To this end, the two countries want to use the Indian rupee instead of the US dollar when netting transactions.
India and Sri Lanka are considering the possibility of substituting the rupee for the US dollar in settlements between the two countries. The South Asian states are thus aiming for greater cooperation in trade and investment. The initiative could bring benefits such as shorter deadlines, lower exchange costs and faster trade credits for financial institutions. In addition, the measure could have a positive impact on the tourism economy and the guest tissue of the two countries.
Last week, the Indian Embassy in the Sri Lankan capital, Colombo, organized a roundtable discussion on the initiative. According to a statement by the Indian news agency PTI As quoted above, officials from both countries’ state banks have confirmed that they have started clearing in rupees. The corresponding framework conditions were created by the central banks of India and Sri Lanka as early as 2022.
Last year Sri Lanka was hit by the worst economic crisis since gaining independence from Britain in 1948. The corona pandemic with its restrictions in the tourist industry initially led to a shortage of foreign exchange. Shortages of fuel, food, and other essentials followed. The country’s government had no funds to pay for imports. According to the Colombo Ministry of External Resources, Sri Lanka defaulted on its $34.8 billion external debt in April.
More on the subject – Turning away from the dollar: India and UAE are aiming for trade agreements based on their own currencies
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