India and the UAE have initiated talks to establish payments through a rupee dirham mechanism. The issue is also likely to find prominence as talks between the Gulf Cooperation Council (GCC) countries and New Delhi on a possible trade agreement gain momentum.

What was seen as an exercise aimed at setting up an alternate payment system by pushing rupee trade in the wake of suspension of SWIFT payments by the US following the Russia-Ukraine war has not only gained momentum but is now being seen as an independent system.

An analyst working for an industry body noted that with many countries now looking at setting up alternative supply chains in India, there is an “openness in accepting rupee trade.”

A year ago, rupee trade — as a concept, was primarily on paper. But today as many as 18 countries have already agreed to trade in rupee and many more are likely to join the bandwagon.

The Reserve Bank of India (RBI) is also aggressively pushing for globalisation of the rupee.

For India and other countries, the exercise helps in saving precious foreign exchange reserves amid rising global economic risks.

While de-dollarisation has been on the radar for many countries, the US currency continued its dominance in the global economy. Dethroning the US dollar is not an easy task. Analysts said that the dominance of the dollar will continue in the times to come.

During the last one year following the Russia-Ukraine war, “the world has keenly witnessed seismic shifting trends across economic, geopolitical and cultural lines,” the International Banker noted.

Last year, the International Monetary Fund revealed that the dollar’s share of global foreign-exchange reserves fell below 59 per cent in the final quarter of 2021, extending a two-decade decline, according to the IMF’s Currency Composition of Official Foreign Exchange Reserves data.

“Payments system can be weaponised today and we cannot depend on other countries’ mercy..India must look at this issue and even work towards making the rupee more acceptable,” National Co-convenor Ashwani Mahajan told India Narrative.

“It is of utmost importance to have self reliance in the payments system and we need to work towards that,” he added.

An analyst said that the US move has only brought the focus back on the necessity of de-dollarisation of global trade.

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