RBI gives nod to India-Malaysia rupee trade; to boost exports

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April 3, 2023

RBI gives nod to India-Malaysia rupee trade; to boost exports

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

This RBI initiative aims to foster trade growth and support the interests of the global trading community by facilitating transactions in Indian rupee, MEA said in a statement.

RBI has allowed India and Malaysia to settle trade in Indian rupee through a payment mechanism set up by the IIBM.
This move is aimed at fostering trade growth and supporting the interests of the global trading community.
Textile trade between the two countries nearly doubled in 2022, with India’s apparel exports to Malaysia reaching $147.628 million.

The textile trade between the two countries nearly doubled in 2022 and the recent decision can be expected to further boost the bilateral trade. India’s apparel exports to Malaysia reached $147.628 million in 2022 from $82.538 million in 2021. Outbound shipments stood at $80.282 million in 2020, $96.936 million in 2019, $82.516 million in 2018, and $93.511 million in 2017, according to Fibre2Fashion’s market insight tool TexPro.

India’s apparel imports from Malaysia were significantly lower than the exports, but they increased from $2.394 million in 2021 to $31.477 million in 2022. Inbound shipments stood at $2.448 million in 2020, $4.463 million in 2019, $5.368 million in 2018, and $2.761 million in 2017.

India’s fibre exports to Malaysia fell sharply in previous years. Exports came down to $0.903 million in 2022 from $3.207 million in 2021. They peaked at $96.899 million in 2018 from $15.659 million in 2017, but trade slipped to $15.199 million in 2019 and $1.387 million in 2020. The import of fibre stood at $8.163 million in 2022 and $9.140 million in 2021, according to TexPro.

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.

Fibre2Fashion News Desk (KUL)

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