Why is it in the news ?
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China rejected India’s proposal to carry out bilateral trade in local currencies which was aimed at bridging the ballooning trade deficit.
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India had suggested to China trade in local currency in order to boost its exports and tackle the widening trade deficit concern.
More in the news
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India’s exports to China stood at only $13.4 billion, imports aggregated to $76.4 billion in 2017-18.
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The trade deficit between two countries stood at $63 billion. It was $51.11 billion in 2016-17.
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The issue of trade in local currencies was discussed in an inter-ministerial meeting in October.
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In the meeting, it was suggested to the RBI and the Department of Economic Affairs would look at the possibility of exploring renminbi-rupee trade with China.
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India has also proposed trade in national currencies with some other countries with whom India has trade deficit. They are: Russia, Iran and Venezuela.
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A trade deficit is when a country imports more than it exports. It is also called a negative balance of trade.
Source
The Hindu.