Many countries negotiating to start rupee trade with India: Sitharaman

Finance Minister Nirmala Sitharaman on Friday said many countries are negotiating to start trade in rupee as the country's fundamentals are strong and the Indian unit has been "mostly stable" against most of the international currencies.

Addressing the Pandit Hriday Nath Kunzru Memorial Lectures 2024 at JNU, Sitharaman also said India has opened up every sector for private investments and will extend fiscal and policy support to sunrise sectors like artificial intelligence, semiconductors and manufacturing using innovative tools.

"Indian Rupee being mostly stable against most of the international currencies except for the US dollar, where it had volatility. But even in that case, compared to many other currencies, the Indian rupee has been far more stable even against the US dollar.

"And therefore, you find countries today wanting to have trade relations built on rupee trade," said Sitharaman while addressing students and professors at her alma mater.

"As a central university, JNU provided me with all India exposure that has helped me grow as a student. A nostalgic visit," Sitharaman said in a post on X.

She had completed her MA and M Phil from the School of Social Sciences and School of International Studies at JNU, respectively.

Observing that rupee trade could have "teething problems", Sitharaman said it is, however, helping many of the countries, which has dollar shortages.

"We have evolved to a stage where we recognise that the Indian rupee, in some regions at least, is used as an instrument of trading currencies. Your macroeconomic stability tells you that," Sitharaman said.

India has started trade in the rupee with neighbouring countries, including Nepal and Bhutan. The rupee trade mechanism has been initiated to facilitate trade in national currency with Russia, while Sri Lanka has included the rupee in its list of designated foreign currencies.

India has a huge market size and has a population of middle class with purchasing power for whom they can produce. And that number of middle class by 2047 could be anywhere between 102 crore, Sitharaman added.

"India is being taken seriously only because the economy is a lot more stable now. Taxation policies are a lot more predictable, and systems are a lot more transparent... We have received the highest FDI beyond USD 600 billion and our reserves are also matching... Economic fundamentals being absolutely stable and strong, which gives us the position that people take us seriously, want to engage with us and we are willing to listen to the suggestions given by India," she noted.

The minister said that the global fora, be it the G20 or the UN, are all now focusing on India's solutions in reforming institutions, which will help in building a better 21st Century for all. It reflects on India's important role in the evolving global landscape.

Sitharaman said India was able to meet the challenges of COVID-19 and other economic issues because of the "responsive government".

"A government, which was ready to listen to the people, to those affected, to observers, to experts and sieve through all the suggestions to come up with solutions and relief measures," she said.

She said India has opened up every sector for investments and space, deep sea, rare earths, and sunrise sectors -- are all going to be the priority areas.

"Artificial intelligence, semiconductors, manufacturing in India with innovative and newer tools are all going to be priority areas where policy and fiscal supports will be extended," she said.

Referring to the management term 'VUCA' principle, which speaks about the volatility, uncertainties and complexities, Sitharaman said VUCA has become a default setup in contemporary times.

"With all these uncertainties, it is the instrument of adaptability that is being infused into the system to prepare us for any eventuality," she said.