Indian exporters will now be able to receive payments in rupees for eligible overseas sales without giving up benefits available under the country's foreign trade policy, removing a regulatory ambiguity that had remained since the Reserve Bank of India introduced a framework for rupee-based international settlements in 2022.
The Directorate General of Foreign Trade (DGFT) has amended the Foreign Trade Policy (FTP) 2023 to formally recognise eligible export proceeds received in Indian currency for the purpose of claiming FTP benefits and meeting export obligations, reported Business Standard.
The amendment, notified on Wednesday with immediate effect, does not replace foreign-currency settlements. Instead, it adds the rupee as an alternative payment route for international trade.
What The New Rule Means For Exporters
Exporters dealing with countries outside the Asian Clearing Union (ACU) arrangement can now agree on contracts and issue invoices in either rupees or foreign currency.
Payments can also be received in either of the two forms.
The more significant change relates to the treatment of rupee receipts under the FTP. For exports to countries other than Nepal and Bhutan, payments received in rupees through authorised banking channels will now be eligible for FTP benefits and can be counted towards export obligations, just as receipts in foreign currency are.
For Iran, the existing provisions governing rupee trade remain in place. These include compliance requirements covering specified sensitive goods and technologies in line with India's international non-proliferation commitments.
Why The DGFT Amendment Was Needed
The RBI had already created a route for settling international trade transactions in rupees.
In July 2022, the central bank introduced the Special Rupee Vostro Account (SRVA) mechanism, under which trade could be invoiced and settled in Indian currency.
The RBI subsequently eased the process for authorised dealer banks to establish SRVAs for overseas correspondent banks. In October 2025, it also permitted balances held in these accounts to be invested in specified Indian corporate debt instruments.
However, the foreign trade policy did not explicitly settle the question of whether exporters receiving rupee payments through these arrangements would be able to claim FTP incentives or use such transactions to meet export obligations.
The DGFT's latest amendment closes that gap by giving eligible rupee receipts explicit recognition under the trade policy.
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Rupee Could Offer An Alternative To Dollar Settlements
The expanded framework could be relevant for countries where businesses face limited access to US dollars or encounter difficulties using established international payment channels.
For Indian exporters and overseas buyers, settling transactions in rupees provides an additional option instead of converting currencies for every trade transaction through the dollar.
However, wider regulatory acceptance alone may not be enough to substantially increase the use of the rupee in global trade.
Ajay Srivastava, founder of the Global Trade Research Initiative, said the DGFT notification removes the uncertainty surrounding the treatment of eligible rupee export receipts.
Srivastava said overseas buyers would need easier access to rupees, while banks outside India would require workable mechanisms to use, invest, convert or repatriate their rupee holdings.
He also pointed to the need for country-specific settlement arrangements, simpler banking procedures, affordable hedging facilities, rupee-denominated export credit and ECGC protection.
Without these supporting mechanisms, he said, rupee invoicing could remain a useful option without becoming a widely adopted method for international trade.
India Not Backing A Common BRICS Currency
The move to facilitate rupee-based trade comes amid a broader global discussion over reducing dependence on the US dollar.
US President Donald Trump has warned BRICS countries against attempts to challenge the dollar, including through the creation of an alternative currency. He has also previously threatened punitive tariffs against countries supporting such initiatives.
India has, however, made clear that it does not support a common BRICS currency. Commerce and Industry Minister Piyush Goyal said earlier this month that India was not in favour of such a proposal.
India's position has instead been to expand the international use of the rupee while maintaining the existing system of foreign-currency settlements.
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RBI Had Highlighted Benefits For India's External Position
The RBI has previously outlined how greater use of the rupee in cross-border transactions could affect India's external finances.
In its 2023 report on the internationalisation of the rupee, the central bank said that settling trade in rupees with countries with which India runs a trade deficit, including oil-exporting nations, could lower the current account deficit measured in convertible currencies.
The RBI also said such a shift could reduce the need to hold large foreign exchange reserves in convertible currencies.