Countertrade presents an effective way of mitigating risks posed by protective trade policies by various countries. Elaborate (200 Words)
Refer - Business Line
Enrich the answer from other sources, if the question demands.
IAS Parliament 3 years
KEY POINTS
· The idea of creating a trade settlement mechanism in rupee to facilitate and augment bilateral trade ties between India and trade partners is not a new one.
· India has, in the past, accepted and made payments in rupee for its trade with several countries including Russia, Nepal, Iran, Bangladesh, and a few east European countries.
· To that end, countertrade presents an effective way of (i) mitigating risks posed by protective trade policies like sanctions, currency restrictions, non-tariff barriers etc; (ii) challenges associated with outward remittances of foreign exchange, where conventional means of payment is non-existent or complex for a variety of reasons; (iii) challenges in securing supply of strategic mineral resources where India has significant import dependence.
· India Exim Bank’s recent study has identified 30 countries to start with, where a countertrade mechanism under the debt-for-goods model would be prudent.
· The countertrade policy for India could be an umbrella arrangement, including a mechanism for local currency trade, but not limited to it.
· The international trading regime with dollar at the pivot has made trade settlements susceptible to actions by the US.
· India has taken a strong stand of safeguarding its economic interests, even amid the growing clout for suspending trade relations with certain countries.
