India and Myanmar may conclude the ongoing talks on rupee trade by the end of June, clearing hurdles for payment mechanisms in the face of US sanctions and providing a significant boost to the bilateral trade.
The Central Bank of Myanmar and the Reserve Bank of India are in negotiation to finalise the terms of reference and standard operating procedures for the payment mechanism. “I do hope that if everything goes well, all the negotiations will be finalised by the end of this month,” Aung Naing Oo, minister of commerce, Myanmar, said.
The minister, who is leading a 42-member delegation to Calcutta, was speaking at a conference organised by EEPC India. He hoped that bilateral trade may double when rupee-kyat direct payment is started after the conclusion of the negotiations between two central banks.
India’s total merchandise trade with Myanmar, which shares borders with north-eastern states of India, stood at $1.76 billion in FY23, with trade surplus in favour of the eastern neighbour. The major exports of Myanmar to India includes vegetable oils and pulses while pharmaceuticals top among export items from India.
The United States imposed sanctions on Myanmar after the military ousted the democratically elected government in 2021 and took control of the country.
The RBI has authorised Punjab National Bank to open a special Indian rupee vostro account for trade settlement in Indian rupee and Myanmar’s kyats and PNB has already approached two Myanmar banks to open special Indian rupee vostro accounts.
“We are very confident that once approval is accorded by the central bank of Myanmar to the Myanmar banks to open the accounts, trade can multiply several times as no forex will be involved,” P. K. Shah, chairman of the committee of foreign trade policy and WTO of EEPC India, said.
To cut reliance on dollars, Myanmar has already started diversifying the usage of the currencies with neighbouring countries, such as China and Thailand, in trade.
There are expectations on both sides of the border that rupee-kyat trade will also facilitate more investments from Indian companies in Myanmar. India ranks at 11th position at present in Myanmar with investment inflow of $775 million, representing 0.84 per cent of foreign investment to the country.
Adani Port
Minister Oo described Adani Group as a ‘very strategic investor’ to Myanmar and expressed hope that there can be ‘some solutions’ for the conglomerate.
Adani Ports and Special Economic Zone Ltd sold its container terminal venture, which was under construction, to a third party.
