India, Japan consider direct yen-rupee trade equalization to reduce dependence on US dollar: Report | Today’s news
India and Japan are set to push through plans for a local currency settlement framework that would allow direct yen-rupee transactions for bilateral trade and reduce dependence on the US dollaraccording to a Nikkei Asia report ahead of Japanese Prime Minister Sanae Takaichi’s visit to New Delhi today.
The proposal could also be included in a joint statement to be issued after Prime Minister Narendra Modi and his Japanese counterpart Takaichi meet for the 16th annual India-Japan summit during an official trip. Nikkei reported.
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It would be the first time that monetary cooperation has been formally included in a joint statement by leaders between the two countriesthe Nikkei reported.
Prime Minister Takaichi will begin his three-day visit to India today to explore ways to expand bilateral ties in a range of areas, including trade, investment and defence.
At the Prime Minister’s invitation Narendra ModiTakaichi will be on an official visit to New Delhi from July 1 to July 3 for the 16th Annual India-Japan Summit, Ministry of Foreign Affairs (MEA) said.
what is the suggestion
Japanese non-residents would be allowed to open accounts with Indian banks under the proposed framework, which would allow financial institutions in both countries to settle cross-border payments directly in yen and rupees without routing transactions through the US dollar, the Nikkei report said.
The plan aims to facilitate trade and investment by streamlining cross-border payments, especially for Japanese companies expanding their presence in India.
The proposal builds on the joint vision of Japan and India until 2025, which first spoke of closer monetary cooperation. Its inclusion in the declaration of the upcoming summit would mean a significant upgrade of bilateral financial cooperation.
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Japan introduced a similar local currency settlement agreement with Indonesia in 2019. Bilateral transactions under this framework are expected to reach $7.7 billion in 2025, according to Nikkei. Tokyo is also evaluating a comparable mechanism with Malaysia.
What does Prime Minister Takaichi have on the agenda?
Prime Minister Takaichi will meet Prime Minister Narendra Modi during his visit to India to strengthen ties with India, which is of utmost importance for the realization of a “free and open Indo-Pacific region”. Foreign Office he said in a statement.
“The two leaders will discuss further enhancing complementary cooperation under the joint vision of Japan and India for the next decade announced at Prime Minister Modi’s visit to Japan last August, in the areas of economic security, including energy, as well as economic growth through investment and innovation,” Japan’s foreign ministry said.
Takaichi’s visit follows Prime Minister Modi’s trip to Tokyo in August 2025, during which the two countries unveiled A shared vision of Japan and India for the next decade and Japan has announced a target to invest ¥10 trillion in India in the coming decade.
A special strategic and global partnership
India and Japan share a special strategic and global partnership whose cooperation spans trade and investment, infrastructure, defense and security, clean energy and new technologies.
Bilateral trade will reach $27.5 billion in the 2025/26 fiscal year, while Japanese investment in India will total $3.2 billion between April and December 2025, according to Indian government data cited by Reuters.
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Japan is among India’s biggest investors and supports major infrastructure projects including the high-speed rail corridor between the cities of Mumbai and Ahmedabad. Japanese firms have also increased investment in Indian companies, including a recent $1.6 billion deal for a 20 percent stake in Yes Bank, Reuters reports.
After last year’s summit, Japan set an investment target of 10 trillion yen (approx ₹60,000 cr) in India in ten years. The two sides have also concluded a number of major pacts, including a framework for defense ties and a 10-year plan to significantly strengthen the economic partnership.
It would be the first time that monetary cooperation has been formally included in a joint statement by leaders between the two countries.
About 1,400 Japanese companies operate in India, almost half of them in manufacturing.
