Indian trade with Cuba may be settled in rupees or euros in the future, reviving memories of friendly relations that existed between the two nations when the late Fidel Castro ruled the North American nation.
Cuban Central Bank officials for the first time met with the Reserve Bank of India and a group of five large local banks, including State Bank of India NSE 0.74 %, Bank of Baroda NSE 1.14 %, Union Bank of India NSE 0.25 %, Bank of India and IBA, as part of discussions on possible bilateral trade through the recently established platform and other forms, said two people familiar with the matter.
Last week, a delegation from Cuba, including central bank representatives and bank officials, discussed the issue over several meetings during a three-day trip in Mumbai.
“The objective is to increase bi-lateral trades between two countries, which can be pursued through the RBI’s rupee payment system among others,” an executive, who attended such meetings, told ET.
RBI, IBA and the Central Bank of Cuba did not respond to ET's request for comment.
The group held multiple meetings across board. While they met the Reserve
Bank of India
officials, they held meetings at India Banks’ Association in presence of senior bankers.
“Individual Indian lenders too discussed bi-lateral trade, related matters like payments and financing at their respective offices,” said another executive.
RBI on July 11 allowed invoicing and payments for international trade in rupees, potentially facilitating greater bilateral business with Russia that is facing a wide range of Western sanctions and is virtually cut off from standard cross-border payment platforms with idea of “The growth of global trade with emphasis on exports from India and to support the increasing interest of the global trading community in INR,” the RBI said.
Through this dedicated platform North Block is now trying to raise weightage of the rupee as a global currency, sources said.
“If you start engaging with tiny countries, one day it will suddenly appear large,” said the banker cited above.
To be sure, Cuba’s trade with India is insignificant. During FY22, New Delhi’s exports to Havana was at $26.56 million versus $1 million imports, show data compiled by Bank of Baroda Economic Research. In the June quarter this year, exports were pegged at $4 million compared with $0.6 million imports.
"The government may be trying to open up new avenues for bilateral trade, especially after the rupee settlement platform amid an evolving geopolitical scenario," said Madan Sabnavis, chief economist at Bank of Baroda. "Our business with Cuba has so far been insignificant partly due to the limited common interest in tradeable goods as well as the physical distance.”
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