Jakarta. Indonesia and India are looking forward to being less dependent on the dollar in their cross-border transactions.

Last year, Bank Indonesia and the Reserve Bank of India inked a memorandum of understanding (MoU) on local currency settlements. The deal would enable exporters and importers to pay in rupiah or rupees, thus getting rid of the need to use the dollar as an intermediary.

Indian Prime Minister Narendra Modi welcomed President Prabowo Subianto on his first-ever state visit to New Delhi over the weekend. A joint statement issued post-meeting mentioned the upcoming use of local currency in their bilateral trade.

“[Both leaders] emphasized the importance of its expeditious implementation,” a joint statement published by the Foreign Ministry on Sunday reads.

“They expressed confidence that the usage of local currency for bilateral transactions would further promote trade between Indonesia and India, and deepen financial integration between the two economies.”

As expected, their bilateral meeting also touched on Indonesia’s recent entry to BRICS, a group of emerging economies known for its de-dollarization efforts. The group brings together Brazil, Russia, India, China, and South Africa. Members include Egypt, Ethiopia, Iran, and the United Arab Emirates.

The joint statement on the recent talks with Modi said that New Delhi welcomed Jakarta’s BRICS membership. The document also wrote that Indonesia was confident that Indonesia’s membership could “further strengthen BRICS solidarity”. In a joint presser, Prabowo, too, told Modi that having Indonesia in the BRICS club could “be beneficial to global stability and regional cooperation.”

At present, Indonesia is already using local currencies in its bilateral transactions with China, Japan, Malaysia, and Thailand. Russian Ambassador to Indonesia Sergei Tolchenov recently revealed that BRICS founding member Moscow had been in talks to strike a local currency deal with Jakarta. 

Government data shows India-Indonesia trade volume totaled $24.1  billion in January-November 2024. Indonesia is exporting more goods than it imports from India. Indonesia recorded a nearly $13.7 billion surplus when trading with India. ASEAN -- of which Indonesia is a member -- is currently trying to finish reviewing its free trade pact with India by this year. This upgraded ASEAN-India Trade in Goods Agreement (AITIGA) is expected to better facilitate businesses.