Saturday, March 29, 2025
India’s Big Move After Trump’s Tariff: BRICS Trade in Rupees No Longer Needs Approval
In response to the 50% tariff imposed by the United States, the Indian government has announced a significant economic decision aimed at strengthening the rupee and reducing dependence on the U.S. dollar. The Reserve Bank of India (RBI) has directed all banks to allow imports and exports with BRICS nations to be conducted in Indian rupees. After this policy change, traders will no longer need to seek special approval for settling trade in rupees.
The step is designed to position the rupee as an international currency while easing India’s reliance on the dollar. At present, nearly 85% of India’s foreign trade is dollar-denominated. With the new mechanism, an estimated 10–15% of transactions may shift to rupees, potentially cutting India’s dollar dependence by nearly $100 billion annually.
The BRICS grouping now consists of 10 member countries: Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, Indonesia, and the United Arab Emirates.
India’s trade with BRICS nations has almost doubled in the past 15 years, though its trade deficit with China and Russia remains a persistent challenge. To address this imbalance and promote the rupee, India has encouraged the use of Vostro accounts for rupee-based settlements.
Beyond BRICS, India has already entered into agreements with countries such as Russia, the UAE, Maldives, Malaysia, Kenya, Sri Lanka, and Bangladesh to enable trade settlements in rupees. Policymakers expect the move to strengthen India’s global economic standing and attract greater foreign investment into the country.
