India Allows International Trade Settlements in Rupees for Export Promotion Schemes

As confirmed by the ministry of commerce of the government of India on November 9, the government of India has introduced some changes to the Foreign Trade Policy to allow for rupee settlement for international trade to promote exports. With the new system, exports and imports can now be invoiced, paid, and settled in Indian currency.

It has been announced by the Reserve Bank of India (RBI) that trade settlements between India and other countries will be settled in Indian Rupees (INR). A notification was released on July 11 this year, assuring the use of Indian Rupees in settlement of trades. As part of its strategy to promote the growth of global trade with an emphasis on exports from India and to support the growing interest of the global trading community in the Indian rupee (INR), RBI had in its release back then stated that it had decided to put in place a separate arrangement for invoicing, payment, and settlement of exports and imports in INR.

A broad framework for cross-border trade transactions in Indian rupees should focus on invoicing, exchange rates and settlement of the transactions, the Reserve Bank of India stated in its release. Allowing INR in international trade settlements is important to facilitate trade with Russia, Iran, and Sri Lanka.

Accordingly, benefits/incentives/fulfilment of Export Obligations under the Foreign Trade Policy will be extended for realizations in Indian Rupees as per the RBI guidelines.