India has eased a rule that, in most cases, required export payments to arrive in foreign currency to qualify for trade-policy benefits, letting rupee-denominated receipts qualify too. The change took effect immediately and covers most trading partners outside the Asian Clearing Union. It builds on 2023 central bank rules that widened the rupee's role in cross-border trade.
India's Directorate General of Foreign Trade updated the Foreign Trade Policy on Thursday, effective immediately, so exporters can denominate and settle contracts, invoices and payments in rupees or foreign currencies for trade with countries outside the Asian Clearing Union. The update removes a barrier that previously required export proceeds to land in freely convertible currencies in most cases, even when invoices were sometimes issued in rupees.
Rupee Receipts Now Count Toward Trade Benefits
Under the new rule, rupee export receipts qualify for trade-policy benefits and count toward exporters' obligations as long as they move through approved banking channels. The change applies to all countries except Nepal and Bhutan, and it aligns with the Reserve Bank of India's 2023 foreign-exchange regulations that already permitted broader rupee use in cross-border transactions.
Asian Clearing Union Members Follow a Different Track
Contracts with Asian Clearing Union members — Bangladesh, Iran, the Maldives, Myanmar, Pakistan and Sri Lanka — must typically use currencies the ACU determines, though Reserve Bank of India directives may also apply. Nepal and Bhutan operate under separate arrangements. The ACU lets member countries settle net trade obligations periodically, cutting the need for repeated foreign-exchange transfers.
Source: Investing.com
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