Indian auto asks govt for rupee trade with African nations

Business
Jun 10 2016 03:12 PM
Harshita

The fall in global commodity prices, especially oil, has hit India's exports to Africa’ as a currency crisis has shut out some of the market for products such as automobiles and auto components. The uncertainty has prompted the government to begin discussions on an alternate payment mechanism to ensure that the dues of Indian exporters are protected.

The ministry of external affairs is discussing the possibility of opening an escrow account with countries such as Nigeria, where the exporters will have the first charge on oil dues that are paid to the African country sophistication. he payment problems, which has resulted in some trade getting routed via Dubai, has also pushed up default risk premium and the government is trying put in place a lower premium regime for SMEs exporting to Africa.

Of the total automobile exports of around $8.86 billion in 2015-16, Africa alone accounted for 30-35% of the total overseas shipments in value terms. In the past during the US sanctions on Iran, India had developed a rupee-dominated trade mechanism with the middle-eastern country.

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