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Informist, Thursday, Aug. 20, 2026

 

NEW DELHI – The government has eased rules for rupee-based export settlements, allowing Indian exporters greater flexibility to invoice overseas sales and receive payments in rupees or through foreign currencies. It has also extended the benefits received for foreign currency settlements under trade policy to rupee-denominated transactions, aiming to widen the use of local currency in ‌global trade.

 

According to the revised rules issued by the Directorate General of Foreign Trade Thursday, exporters selling to countries outside the Asian Clearing Union can denominate export contracts and invoices in Indian rupees or any foreign currency. Export payments can also be received in either, it said. Exports financed through EXIM Bank or government's credit lines can also be invoiced in rupees, it added.

 

Asian Clearing Union is a regional payment arrangement for settling trade transactions among participating Asian countries. For exports to countries under it, such as Bangladesh, Iran, Maldives, Myanmar, Pakistan and Sri Lanka, contracts are required to use currencies determined by the bloc. Nepal and Bhutan are treated separately, and the notification clarified that export contracts to these two nations can be settled in rupees. In case of Iran, the above provisions will apply, though they will be subject to wider restrictions under foreign policy. 

 

Ajay Srivastava, founder of Global Trade Research Initiative, said that earlier, exporters receiving rupee payments through an Reserve Bank of India-approved banking channel were not always certain whether such receipts would qualify for foreign trade policy benefits or count towards their export obligations. The new rules remove this uncertainty by placing eligible rupee receipts on par with foreign-currency earnings.

 

The policy comes amid the government's incessant push to increase the usage of rupees in global trade settlements. It will help with internationalisation of rupee, a top priority for both the government and the Reserve Bank of India. The change will make local currency settlement more attractive for Indian exporters and lower foreign currency dependence, related costs, and exchange-rate risks. 

 

It could also help other countries settle trade with India without relying on dollars, like Russia, which has stayed away from direct dollar-denominated settlement after the West imposed sanctions on Moscow following the Russia's invasion of Ukraine in February 2023. "It could be particularly useful in trade with countries facing dollar shortages or difficulty accessing established international payment systems," Srivastava said.

 

According to him, while the notification removes an important regulatory barrier, it does not resolve the commercial difficulties surrounding rupee trade. Foreign buyers struggle to obtain rupees, while overseas banks may hesitate to hold large rupee balances because the currency is not fully convertible, he said. Trade imbalances may leave some partner countries with unused rupees. Exchange-rate risks, expensive hedging, complex banking procedures and the continued global preference for the US dollar may further limit acceptance of rupee settlement, he said. 

 

Going ahead, he suggested India negotiates practical rupee-settlement agreements with key trading partners and allow wider uses for accumulated rupee balances. Foreign entities need simple options to use, invest, convert or repatriate these funds, he said. 

 

He also suggested the central bank and government must introduce standard banking procedures covering documentation, Know Your Customer requirements, reporting and settlement timelines. "Affordable currency hedging, rupee-denominated export credit and ECGC protection may also be provided on terms comparable to those available for foreign-currency transactions," he said. "India may initially prioritise countries facing foreign-exchange shortages, importing significant quantities from India or already earning substantial rupee balances through exports to the Indian market. These measures can make rupee settlement a practical trading option," Srivastava said.  End

 

US$1 = INR 95.71

 

Reported by Priyasmita Dutta

Edited by Deepshikha Bhardwaj

 

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