Finance Minister Minister Nirmala Sitharaman on Tuesday wondered why India Inc is hesitant about investing at a time when not just the foreign investors are showing confidence, but also a number of countries have shown interest in bilateral rupee trade as well.
Inaugurating Mindmine summit here, the FM said policies are dynamic — not an end in themselves but evolving. She specifically mentioned the policy with regard to industries in the sunrise sector which have been the beneficiaries of support and incentives from the government. “I would equally want to know from the Indian industry why they are hesitant (to invest)? We will do everything to get the industry come and invest here (but) I want to hear from India Inc what’s stopping you?” she asked.
She said countries and industries abroad seem to believe that “India is the place to be in” right now. This is reflected in FDI and FPI inflows and confidence among stock market investors. The FM compared the Indian industry to Lord Hanuman who was not aware of his own powers.
“Is it like Hanuman ? You don’t believe in your own capacity, in your own strength and there has got to be someone standing next to you and say you are Hanuman, do it? Who is that person who is going to tell Hanuman? It can’t certainly be the government,” said Sitharaman.
She said the government has brought in production linked incentive scheme, cut tax rates to encourage the domestic industry to invest in manufacturing. “This is the time for India. We cannot miss the bus,” she added.
Rupee Trade Settlement
The FM said many countries have evinced interest in bilateral trade in rupee. She said it is opening the Indian economy much more than what had been previously imagined. “Post-pandemic, India is coming up with so many out-of-the-box solutions. I would like to highlight the fact that we are a lot more open with the Indian economy, a lot more open in the way we are talking to countries, we are willing to have our digital platforms become inter-operable between countries to enable cross-border transactions,” she said.
When asked if India is ready for capital account convertibility, she replied that it isn’t the rouble-rupee which was in the old format. “Now this (bilateral rupee trade) formulation. I am glad the RBI has come up with it at a time which was so critical,” she said.
In July, RBI issued a detailed circular asking banks to put in place additional arrangements for export and import transactions in rupee in view of the increasing interest of the global trading community in the domestic currency. The announcement by the central bank to allow cross-border trade transactions in the rupee is a timely move and a step towards internationalisation of the currency.
Currently, a large part of bilateral trade between India and Russia is getting settled in the rupee due to sanctions imposed by the US and Europe following Moscow‘s attack on Ukraine. The RBI had said that for settlement of trade transactions, banks concerned will require special rupee vostro accounts of correspondent banks of the partner trading country.