Rupee settlement allowed for international trade

India on Wednesday allowed rupee settlement of international trade for export promotion schemes.

"Given the rise in interest in internationalisation of Indian rupee, the given policy amendments have been undertaken to facilitate and to bring ease in international trade transactions in Indian rupees," the commerce and industry ministry said, while announcing the change in the foreign trade policy.

In July, the Reserve Bank of India (RBI) had asked banks to put in place additional arrangements for export and import transactions in Indian rupees in view of increasing interest of the global trading community in the domestic currency. It had, on July 11, announced the setting up of a mechanism to settle global trade in rupees. Under the mechanism, all exports and imports may be denominated and invoiced in the Indian currency, with the exchange rate between the trading partner countries to be determined by the market.


"The move will help exporters set the most competitive pricing for their exports as they would be eligible for all benefits. Moreover, there are no foreign exchange risks involved," said Ajay Sahai, director general, Federation of Indian Export Organisations.

The decision to allow INR in international trade settlements is considered an important step to facilitate trade with Russia, Iran, Bangladesh and Sri Lanka.

The ministry said the changes have been notified for imports, for exports, export performance for recognition as 'status holders', realisation of export proceeds under advance authorisation and Duty-Free Import Authorisation schemes, and realisation of export proceeds under export promotion capital goods scheme.

As per the notification, the changes have been introduced in the Foreign Trade Policy for grant of export benefits, incentives, fulfilment of export obligation, and for export realisations in INR as per the RBI guidelines.

"Accordingly benefits/incentives/fulfilment of export obligation under the Foreign Trade Policy has been extended for realisations in Indian rupees as per the RBI guidelines dated July 11, 2022," it said.