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regular-article-logo Friday, 24 May 2024

India introduces direct Rupee-Kyat payment system for importers of Myanmar pulses

The streamlined process uses Punjab National Bank’s Special Rupee Vostro Account (SRVA) for Rupee-Kyat settlements. This eliminates the need for multiple currency conversions, a major pain point for traders, the consumer affairs ministry said in a statement

Our Special Correspondent New Delhi Published 14.04.24, 11:04 AM
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Trade push Sourced by the Telegraph

India has introduced a direct Rupee-Kyat payment system for importers bringing pulses from Myanmar, the world’s second-largest producer of these lentils.

The streamlined process uses Punjab National Bank’s Special Rupee Vostro Account (SRVA) for Rupee-Kyat settlements. This eliminates the need for multiple currency conversions, a major pain point for traders, the consumer affairs ministry said in a statement.

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“The new mechanism will benefit businesses by reducing transaction costs associated with foreign exchange fluctuations,” said Nidhi Khare, secretary, consumer affairs.

This initiative comes as India, which is grappling with a domestic pulse shortage, relies heavily on Myanmar for imports, particularly tur and urad dals.

Discussions between the consumer affairs ministry and the Indian Mission in Yangon addressed concerns around import prices because of exchange rate movements and existing pulse stocks held by Myanmar traders.

India’s retail inflation eased to a 10-month low of 4.85 per cent in March 2024, driven by a decline in food and fuel prices, according to data released by the National Statistical Office (NSO).

The inflation in the food basket, which has been a major concern for policymakers, eased to 8.52 per cent in March from 8.66 per cent in February. This is likely due to a seasonal decline in vegetable prices, which rose 28.3 per cent in March compared with 30.25 per cent in February. Pulses inflation also moderated slightly, rising 17.7 per cent year-on-year in March compared with 18.9 per cent in February.

“While core inflation continues to moderate, we remain wary of the heatwaves going ahead which could keep food inflation elevated and volatile in the summer months.

“Overall, we expect the Monetary Policy Committee to remain in a wait-and-watch mode until the first half of FY2025, with possible easing likely towards the latter part of the current fiscal depending on the evolution of monsoons, crude oil prices and timing of Fed’s rate easing cycle,” Upasna Bhardwaj, chief economist, Kotak Mahindra Bank, said.

Volatile food prices have been a key challenge for the government and the central bank, which kept its interest rates unchanged for the seventh consecutive meeting last week and has said it will focus on bringing inflation down to 4 per cent.

To contain food prices the Narendra Modi government has kept a ban on exports of wheat, rice and onions.

The Rupee-Kyat Settlement Mechanism applies to both sea and land border trade, encompassing both goods and services. The move is expected to boost bilateral trade efficiency.

“The ministry is actively disseminating information about the new mechanism, particularly to pulse importers, encouraging them to utilise the Rupee-Kyat
system via SRVA at Punjab National Bank,” the statement added.

Meanwhile, to ensure market stability, the government has mandated weekly pulse stock declarations, including imported yellow peas, on the designated portal https://fcainfoweb.nic.in/psp/ starting April 15. This applies to importers, millers, stockists, and retailers.

The ministry has warned against forward trading in pulses, a practice that can artificially inflate prices. Violators will face penalties under the Essential Commodities Act.

State governments and Union territories have been instructed to enforce these measures, including verification of declared stocks and stern action against entities found providing false information.

This multi-pronged approach aims to streamline pulse imports from Myanmar, reduce transaction costs, and ensure market stability for essential food commodities in India.

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