US President Donald Trump imposed 25% tariffs on India, accusing it of indulging in anti-American activities. Trump also imposed a penalty on India for buying Russian crude oil and military equipment despite the sanctions. The US President is coming down hard on BRICS, especially India, accusing them of advancing de-dollarization by putting the rupee ahead for trade and transactions.
Even before Trump imposed 25% tariffs, India had been closely working to allow nearly 30 countries, including BRICS members, to settle payments in the rupee through the special Vostro bank accounts. The Reserve Bank of India (RBI) recently lifted the cap on Vostro accounts investments to push the rupee-denominated trade, according to a recent report from Reuters.
Also Read: Trump’s 25% Tariff on India Puts BRICS Unity to the Ultimate Test
BRICS Strategy: 30 Countries Allowed to Settle Payment With India in the Rupee
BRICS member India is aiming to internationalize the rupee with the new Vostro bank accounts, making it easier for other countries to settle payments. Vostro accounts enable domestic Indian banks to facilitate payments from various countries and overseas businesses in rupees. Countries that initiate cross-border transactions with India can open Vostro accounts and remit the rupee directly. This saves overseas clients from foreign exchange charges that eat up a chunk of their remittance.
Among the 30 countries, 22 nations have already settled trade using the rupee through Vostro bank accounts. The countries include Bangladesh, Belarus, Botswana, Fiji, Germany, Guyana, Israel, Kazakhstan, Kenya, Malaysia, Maldives, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles, Singapore, Sri Lanka, Tanzania, Uganda, and the United Kingdom. BRICS members and partner countries, Russia, Belarus, Malaysia, and Uganda, among others, have used the rupee for settlements with India.
Also Read: BRICS Vows to Triple Trade Flow With New Partnerships
While the US imposes tariffs on BRICS, India is a step ahead in making the rupee tradable for transactions. How the two countries will move forward from here will dictate the upcoming policies of the economic giants. Trump is in no mood to allow other nations to take undue advantage of the US when it comes to trade.