With the aim to boost trade, govt allows rupee settlement in export promotion schemes
The Commerce Ministry said in a statement that the Central government has made changes to the Foreign Trade Policy (FTP) to allow for rupee settlement of international trade for export promotion schemes.
The changes mean benefits, incentives, and fulfillment of the export obligations under the Foreign Trade Policy can be extended to export payments made in Indian rupees, as outlined by the Reserve Bank of India (RBI) in July.
The move to allow the settlement of trade in Indian rupees came amid increasing pressure on the Indian currency in the wake of Russia’s invasion of Ukraine in late February.
The statement read, “Given the rise in interest in the internationalization of the Indian Rupee, the given policy amendments have been undertaken to facilitate and to bring ease in international trade transactions in Indian Rupees.”
The Ministry said the changes have been notified for imports for exports, export performance for recognition as Status Holders, the realization of export proceeds under advance authorization and Duty-Free Import Authorization schemes, and realization of export proceeds under the export promotion capital goods scheme.
The Indian central bank, on July 11, announced the setting up of a mechanism to settle global trade in rupees. Under the mechanism, all exports and imports may be denominated and invoiced in rupees, with the exchange rate between the currencies of the two trading partner countries to be market determined.
To settle these transactions, authorized Indian banks have to open Special Rupee Vostro Accounts of correspondent banks of the partner trading country.
The move was aimed to boost global trade with a focus on shipments from India and supporting the interests of the global trading community in Indian currency.
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