India eased rules on rupee export payments, putting them on par with foreign-currency earnings for trade-policy benefits, aiming to promote wider use of the local currency in global trade.
The Directorate General of Foreign Trade (DGFT) amended the Foreign Trade Policy allowing export contracts, invoices and payments with non-Asian Clearing Union (ACU) countries to be denominated and settled in rupee or foreign currencies.
Notably, the move removes a hurdle to rupee trade and could help commerce with countries facing dollar shortages, but its wider use will depend on whether foreign firms and banks can obtain and use rupees easily.
As per the new rules, the eligible rupee export receipts, except those involving Nepal and Bhutan, will qualify for trade-policy benefits and count towards exporters’ obligations if routed through approved banking channels.
The changes align with the Reserve Bank of India’s 2023 foreign-exchange rules permitting broader rupee use in cross-border trade.
It is to be noted that earlier, proceeds generally had to be realised in a freely convertible currency, even though invoices could in some cases be raised in rupees.
One of the key changes under the new rules is that eligible rupee payments received through approved banking channels will now qualify for benefits under the Foreign Trade Policy and count towards fulfilment of export obligations.
This removes uncertainty over whether rupee-denominated export receipts would receive the same treatment as foreign-currency earnings. Exports financed through EXIM Bank or Government of India lines of credit can also be invoiced in Indian rupees.
“Regulatory permission alone will not create large-scale rupee trade,” Ajay Srivastava, founder of the Global Trade Research Initiative, said as reported by Reuters.
He cited the foreign buyers’ difficulty in obtaining rupees and overseas banks’ reluctance to hold a non-fully convertible currency.
India Eases Rules For Rupee Export Payments, Allows Invoice, Overseas Sales Settlement In INR
