India eases rupee export payment rules to boost global use

On Thursday, India made changes to its regulations to permit rupee-denominated export payments to enjoy the same trade-policy advantages as earnings from foreign currencies, aiming to broaden the local currency's presence in global trade. The Directorate General of Foreign Trade implemented these modifications to the Foreign Trade Policy, effective immediately.

Now, export contracts, invoices, and payments with non-Asian Clearing Union countries can be denominated and settled in rupees or foreign currencies. This amendment eliminates a previous restriction that often required export earnings to be received in freely convertible currencies, even when invoices could be issued in rupees. Rupee exports will now be eligible for trade-policy benefits and count towards exporters' obligations when processed through authorized banking channels.

The rule applies to all countries, except Nepal and Bhutan. This adjustment aligns with the Reserve Bank of India's 2023 foreign-exchange regulations, which allowed greater utilization of the rupee in cross-border transactions. For Asian Clearing Union members, including Bangladesh, Iran, Maldives, Myanmar, Pakistan, and Sri Lanka, contracts typically must be in currencies determined by the ACU, though Reserve Bank of India directives may also apply.

Nepal and Bhutan follow separate protocols. The Asian Clearing Union facilitates member countries' periodic settlement of net trade obligations, diminishing the necessity for frequent foreign-exchange transfers.