NE Watch Desk
Bharat achieved its goal to promote the
local currency globally when the world’s third-largest energy consumer made first-ever
payment in rupees to the United Arab Emirates or UAE in exchange for crude oil.
The Asian Giant’s trade initiative is
part of vast attempts to expand oil suppliers, cut transaction costs, and set
up rupee as a realistic trade settlement currency.
This move goes well with the Reserve
Bank of India’s action on July 11, 2022, permitting importers to pay in rupees
and exporters to receive payments in the local currency.
Globalization is an ongoing process, and
presently, there are no specific targets, noted the officials.
Bharat and UAE went ahead with a deal on
rupee settlements in July. This move paved way for the Indian Oil Corporation
or IOC to make payments for buying one million barrels of crude oil from Abu
Dhabi National Oil Company-Adnoc in Indian rupees.
Apart from UAE, some Russian traders
agreed to import oil in exchange for rupees.
Bharat is heavily dependent on oil
imports amounting to over 85 per cent. Subsequently, it has embraced a
multifaceted plan, asserting upon sourcing from the most cost-effective
suppliers, diversifying supply sources, and adhering to international norms.
During the ramp-up of Russian oil
imports, the country’s approach proved beneficial in saving billions of
dollars.
Still, Bharat continues to look for
exploring trade settlements in rupees rather than dollars to eliminate the tedious
process of currency conversions.
Trading in rupee becoming a reality for
Bharat holds significance as many oil exporters have hesitated to embrace the local
currency, though there has been success in non-oil trade settlements with particular
nations.
Hesitation in those nations cropped up as
they were concerned about fund repatriation and high transactional costs, the Oil
Ministry had said while addressing a parliamentary standing committee.
Bharat spent $157.5 billion on importing
232.7 million tonnes of crude oil in the financial year 2022 to 2023.
Main suppliers of crude oil to Bharat are
Iraq, Saudi Arabia, Russia and UAE. West Asia alone is contributing 58 per cent
of total supplies. The domestic supply hardly meets 15 per cent of the demand.
