HSBC India has issued its first renminbi (Rmb)-denominated documentary credit for a Mumbai-based pharmaceuticals company.

Last August, the bank also signed its first Rmb-denominated cross-border trade transaction with a pharmaceuticals company in India, and identifies the country as a hub for Rmb trade growth.

Sandeep Uppal, managing director and head commercial banking at HSBC India, says: “Indian businesses have long recognised the enormous growth potential of doing business with suppliers in China.

HSBC’s research estimates that approximately US$2tn, or a third of China’s annual trade, will be settled in Rmb by 2015. Momentum is building fast as more than 10% of China’s trade was settled in Rmb in the first quarter of 2012.

As trade between these two economic powerhouses gathers pace, Indian businesses that use documentary credits in Rmb can expect increased discounts from their Chinese suppliers who no longer need to hedge against the US dollar.”

HSBC expects trade growth between China and India to increase by 10-11% annually over the next five years. China is currently India’s largest import partner, and third largest export partner.