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‘Stronger bilateral ties emerging amid fading multilateral treaties’


NEW DELHI : Finance minister Nirmala Sitharaman backed the need for improved bilateral trade relations between India and Sri Lanka at a time when multilateral tie-ups were not working, and said that the country should look at opportunities for regional currency arrangements, food and energy security, in order to protect the country’s economy and prevent forex driven crisis.

“Global multilateral treaties are now receding. It is not happening. People are not wanting to talk about multilateral agreements. It might revive… All over the world, there is clear interest in having bilateral arrangements, arrangements in regional currencies, arrangements so that you can ensure there won’t be any shocks because of currency volatilities, arrangements so that there are no foreign exchange-driven crises, arrangements that you are sure between the two countries that your food security is in place, your energy won’t go through a roller coaster ride. India and Sri Lanka should also benefit from such a bilateral arrangement,” she said.

The minister was speaking at the India-Sri Lanka Business Summit in Colombo, and noted that the increasing concern of the the widening impact of the war between Israel and Hamas in Gaza, and the ongoing Russia-Ukraine war, on fuel prices, in the event of supplies getting disrupted.

India has been pushing for settling trade in Indian Rupee, which it started with buying oil from Russia last year. So far, India has forged agreements with the United Arab Emirates and Sri Lanka to settle trade in local currencies, even as it has begun talks with countries like Indonesia and Saudi Arabia on the same.

The finance minister urged the industries of the island nation to look at new areas such as energy, pharma and digital public infrastructure, besides tea and tourism, and for the industry chambers from both sides to work on facilitating discussions on the new business areas.

She added that Sri Lanka could benefit from greater cooperation with India which was the fastest growing economy on the back of strong fundamentals.

“There’s no harm to widen the economy basket and in that energy is a big item which can enter the basket,” she said, noting that the country had natural advantage for solar and wind energy where big ticket investments could rush in at a time when the country needs energy at affordable rates to progress. “Look at energy, at pharma, at many other sectors in which your resources and endowments have not been tapped,” she said.

The minister further added that the High Commissioners of both countries were engaged on ways to take digital public infrastructure (DPI) to benefit in financial inclusion. “When we get into technology, economies benefit, whether it is starting from identity use digital identity, use financial inclusion to digital accounts, government benefits being transferred with technology as an instrument. Sri Lanka and India stand to benefit,” she said.

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Updated: 03 Nov 2023, 12:08 AM IST

Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.