Tanzania and India have reached an agreement that eliminates the need for US dollars in trade between the two countries.
Tanzania and India can do business with their two currencies, the Tanzanian shilling and the Indian rupee, thanks to a bilateral trade agreement.
According to the Indian High Commission in Dar es Salaam, trade between the two countries was worth US$4.5 billion (about Shillings 10.4 trillion) in the year to March 2022. India is one of Tanzania’s largest trading partners.
According to Binaya Pradhan, the Indian High Commissioner for Tanzania, between April 2021 and March 2022, India’s exports to Tanzania totaled US$2.3 billion (or about 5.3 trillion shillings), while its imports from the East African country rose to 2 .2 billion US dollars (about 5.1 trillion ATS).
He explained that Tanzanian companies and banks have the opportunity to make the most of the new framework to enable seamless payments in local currencies.
Pradhan added that this should boost bilateral trade and help keep FX trading going.
Tanzania exports minerals, especially gold, and agricultural products to India, while the South Asian country imports petroleum products, medicines and technical products from Tanzania.
The Reserve Bank of India (RBI) has paved the way for local currency trading by allowing authorized Indian banks to open Special Rupee Vestro (SRVA) accounts in Tanzania, according to a press release published on the Indian bank’s website High Commission was released in Dar es Salaam.
Tanzanian banks are required to open an SRVA in India to trade under this mechanism. You will then need to contact the authorized Indian banks who will contact the RBI with information about the deal in order to obtain approval.