RBI Approves Rupee Trade Between India and Malaysia To Promote Exports

Following a decision by the Reserve Bank of India, India and Malaysia can now settle trade in the Indian Rupee in addition to the current modes of settlement in other currencies. According to the Indian ministry of external affairs (MEA), the India International Bank of Malaysia (IIBM) has operationalized a payment mechanism by opening a special Rupee Vostro account through its corresponding bank in India, which is the Union Bank of India.

By facilitating transactions in Indian rupee, the RBI initiative aims to promote trade growth and support the interests of the international trading community, according to a statement from MEA.

The two nations' textile trade almost doubled in 2022, and it is anticipated that the recent decision will increase bilateral trade even more. From $82.538 million in 2021 to $147.628 million in 2022, India exported apparel to Malaysia. According to sources, the value of outbound shipments was $80.282 million in 2020, $96.936 million in 2019, $82.516 million in 2018, and $93.511 million in 2017.

The value of India's apparel imports from Malaysia increased from $2.394 million in 2021 to $31.477 million in 2022 despite being significantly less than the value of exports. In 2020, $4.463 million, $5.368 million, $2.761 million, and $2.448 million were the corresponding inbound shipments.

India's exports of fibre to Malaysia sharply decreased in previous years. From $3.207 million in 2021, exports decreased to $0.903 million in 2022. Trade decreased to $15.199 million in 2019 and $1.387 million in 2020 after reaching a peak of $96.899 million in 2018 from $15.659 million in 2017. According to sources, the value of fibre imports was $9.140 million in 2021 and $8.163 million in 2022.

India imported fabric worth $22.856 million in 2022 and $13.961 million in 2021 from Malaysia. Its export of fibre stood at $50.805 million in 2022 and $32.159 million in 2021. India's yarn exports to Malaysia were higher than the imports, with outbound shipments at $15.470 million in 2022 and $37.197 million in 2021, while India's imports of yarn from Malaysia stood at $6.004 million in 2022 and $5.311 million in 2021.