India is looking to expand rupee-based trade settlements to help partner countries facing foreign currency shortages continue importing essential goods, Finance Minister Nirmala Sitharaman said on Friday.

Speaking at an Atlantic Council event during the IMF-World Bank annual meetings in Bangkok, Thailand, Sitharaman explained that local currency settlements could help maintain trade when countries struggle to access major international currencies.

The initiative aims to make cross-border payments easier and support trade with countries facing economic pressure. Sitharaman said geopolitical tensions, conflicts and financial difficulties have pushed several nations into debt and balance of payments crises.

By promoting rupee settlements, India hopes to provide trading partners with another payment option. This approach could help maintain supply chains and ensure that essential goods continue reaching international markets.

The finance minister also discussed India’s trade agreements and its efforts to strengthen bilateral partnerships. She said India’s trade agreement with the Association of Southeast Asian Nations (ASEAN) needs changes because the current arrangement creates concerns for Indian importers and domestic manufacturers.

India and ASEAN are reviewing the agreement. New Delhi wants to continue the partnership while addressing trade imbalances and concerns about market access.

Sitharaman also defended India’s decision to stay out of the Regional Comprehensive Economic Partnership (RCEP). India withdrew from the proposed trade arrangement in November 2019, citing concerns about import competition, rising trade deficits and safeguards for domestic industries and agriculture.

India continues to trade with countries participating in RCEP while pursuing other trade agreements. The government is also working to strengthen economic partnerships with countries that can offer new opportunities for Indian businesses.

Rupee-based settlements could become an additional tool for supporting international commerce. Their effectiveness will depend on participating countries’ willingness to adopt the mechanism and their ability to use the rupee for cross-border trade payments.

India’s approach reflects its broader effort to maintain trade flows, support partner economies and protect domestic economic interests amid global financial uncertainty.