India's new Foreign Trade Policy (FTP) 2023, launched by the central government on March 31 this year, has lent special focus on settlement of international trade in Indian rupee.
Settlement of international trade in rupee has been allowed under the new policy. Changes have been introduced for the grant of export benefits, and fulfilment of export obligations for export realisations in the Indian currency, as per RBI norms.
The move is a step forward in India’s efforts to make the rupee a global currency, while attempting to insulate itself from global shocks.
During the launch of the policy in New Delhi, Commerce Secretary Sunil Barthwal said that India will offer its currency as an alternative for trade to countries that are facing a shortage of dollars in the wake of the sharp tightening in monetary policy by the US Federal Reserve.
“Facilitating rupee trade for countries facing currency risk will help disaster-proof them,” he said.
A senior official of the commerce industry said that Sri Lanka, Bangladesh and Egypt are all facing dollar shortage, and have shown interest to trade in the Indian currency.
As per details accessed from the updated FTP, all export contracts and invoices will now be allowed to be denominated in Indian rupee. Export proceeds may also be allowed in rupees, provided it is done through a Vostro account.
The new FTP also allows invoicing, payment and settlement of exports and imports in rupee in compliance with RBI rules.
FTP 2023 has allowed for export proceeds in Indian rupee against exports to Iran to avail export benefits / incentives, at par with export proceeds realised in freely convertible currency.
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