India has reached a similar agreement with Indonesia, with both nations working on a real-time payment system and local currency trading, after recently concluding a pact with the United Arab Emirates to promote local currencies.
The usage of UPI and other comparable systems is becoming more prominent as governments attempt to broaden the reach of digital payments between nations.
The topic came up at the meeting between Indonesian Finance Minister Indrawati and Indian Finance Minister Nirmala Sitharaman as the two nations announced the beginning of an “Economic and Financial Dialogue” aimed at strengthening their trade and investment ties.
The currency agreement, which is likely comparable to the one with the UAE, would allow Indian exporters to settle their transactions in Indonesian rupiah while the other side might profit in Indian rupees, according to authorities.
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One of India’s frequent trading partners is Indonesia; the two nations exchanged almost $39 billion in goods and services in the previous year. Having a $19 billion trade surplus in 2022 as a result of huge exports of palm oil and petroleum, Indonesia ranked as India’s sixth-largest trading partner. The island country, one of the biggest economies in Asia, is also the subcontinent’s biggest trading partner in the ASEAN neighborhood.
An Indian official claimed that Indonesia and other nations were interested in India’s digital public infrastructure and that Indonesia may “take one of the bricks from the India stack” after Singapore, the UAE, and France.
In the ASEAN area, Indonesia is India’s second-largest commercial partner, with trade totaling $38.9 billion in the most recent fiscal year (2022-23), up 48% from the previous year. Nine times more trade has occurred since 1997 between the two developing economic powers.
After Singapore and the United Arab Emirates, Indonesia will become the third nation whose payment system is linked to India’s Unified Payments Interface (UPI) after this has occurred.
