Govt of India allows International Trade Settlements in Indian Rupees for Export Promotion Schemes

The government of India has brought about some changes to the Foreign Trade Policy to allow for rupee settlement of international trade for export promotion schemes, the commerce ministry confirmed on November 9. Now, the invoicing, payment, and settlement of exports/imports can be done in Indian currency.

The Reserve Bank of India (RBI) announced to allow trade settlements between India and other countries in Indian Rupees (INR). It released the notification on July 11, this year assuring the use of Indian Rupees in trade settlement. “In order to promote the growth of global trade with emphasis on exports from India and to support the increasing interest of the global trading community in INR, it has been decided to put in place an additional arrangement for invoicing, payment, and settlement of exports/imports in INR,” RBI had stated in its release back then.

The broad framework for cross-border trade transactions in INR needs to focus on invoicing, exchange rates, and settlement, RBI clarified in its release.  The decision to allow INR in international trade settlements is considered an important step to facilitate trade with Russia, Iran, and Sri Lanka.

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

Given the rise in interest in the internationalization of the Indian Rupee, the given Policy amendments have been undertaken to facilitate and to bring ease in international trade transactions in Indian Rupees.

Indian importers undertaking imports through this mechanism need to make the payment in INR which shall be credited into the Special Vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller /supplier, RBI clarified earlier.

Indian exporters, undertaking exports of goods and services through this mechanism, shall be paid the export proceeds in INR from the balances in the designated Special Vostro account of the correspondent bank of the partner country.