The internationalisation of the Indian rupee is poised to revolutionise India’s economy, particularly Goa’s trade and industry landscape.
By establishing the Indian currency as a widely accepted medium of exchange, store of value, and unit of account in international transactions, India aims to reduce its dependence on the US dollar, promote global economic influence, increase trade and investment, enhance financial stability, and lower borrowing costs. This will also lead to higher composition in international reserves and seigniorage.
The internationalisation of the rupee allows for direct rupee transactions with countries, making exports more competitive by lowering currency conversion costs and hedging risks.
Goa is a key player in India’s global trade, with annual exports valued at approximately $2.5 billion (as of 2022-23), driven primarily by pharmaceuticals, engineering goods, chemicals, electronics, marine products, iron ore, and more.
How Trade Partners Will Benefit
According to the directorate general of commercial intelligence and statistics (DGCI&S), India’s overall exports reached $778 billion in 2023–24. Goa’s significant trade relationships with countries like Bangladesh, Nepal, Thailand, Malaysia, and the Middle East will benefit from this move.
The internationalisation of the rupee will simplify payments, reduce transaction costs, and increase competitiveness. There are some key benefits for Goa’s trade partners. Simplified payments and reduced transaction costs will increase competitiveness in growing markets like Bangladesh and Nepal. Eliminating reliance on third-party currencies like the US dollar will make trade transactions more efficient in Thailand and Malaysia. As far as Middle Eastern countries are concerned, the potential for rupee-dirham or rupee-riyal settlements will open doors for more direct and seamless trade.
Boost To Shipping Sector
The shipping industry in Goa will also reap significant benefits. The Mormugao port, one of India’s oldest and most important, handled 20.6 million tonnes of cargo in 2023–24, primarily iron ore. The rupee’s internationalisation will enable foreign shipping companies to settle dues in Indian rupees, making the port more attractive and cost-effective. This will stabilise logistics costs, affected by foreign exchange fluctuations.
Foreign shipping companies operating at Mormugao port can settle dues in rupees, making the port a more attractive and cost-effective hub. Smoother financial transactions will promote Goa as a gateway for south and southeast Asian trade.
The shipbuilding industry in Goa will also experience significant growth due to lower import costs. Reduced exchange rate volatility will lower the overall cost of raw materials as well. Easier transactions will allow Goan shipbuilders to quote and settle contracts in rupees.
Local Advantage
Locally, the internationalisation of the rupee will improve the supply chain efficiency and production timelines and attract foreign investments in sectors like infrastructure, tourism, and logistics. To capitalise on this opportunity, Goa’s govt and industry stakeholders must work together to modernise customs infrastructure, improve port and airport facilities, and enhance road and rail connectivity.
The internationalisation of the rupee is a game-changer for India and Goa’s trade future. With $2.5 billion worth of exports annually and a thriving industrial sector, Goa is poised to become a more competitive and connected player on the global stage.
The writer is the president of the Goa Chamber of Commerce & Industry and the chairperson of the Dempo Group
