The Center said on Wednesday that it has changed the foreign trade policy to permit the settlement of international trade in Indian rupees for the Export Promotion Schemes.
Therefore, in accordance with the RBI circular released on July 11, 2022, the Directorate General of Foreign Trade (DGFT) had already adopted various adjustments to allow invoicing, payment, and settlement of exports and imports in rupee.
In a July circular to authorised dealer banks, the RBI stated that it had been decided to implement an extra measure to support the growing interest of the international trading community in the rupee and to encourage the growth of global commerce with a focus on exports from India. Indian rupee invoicing, payment, and settlement arrangements for exports and imports.
The ministry announced today that, in addition to the aforementioned notification, changes have been made to the Foreign Trade Policy to allow for the granting of export incentives and benefits as well as the fulfilment of export obligations under the policy for export realisations in Indian Rupees in accordance with RBI regulations.
According to the ministry, the changes to the policy were made to make it easier to conduct international commercial transactions in Indian rupees in light of the growing interest in the internationalisation of the currency.
In its notification published in July, the RBI detailed how trade transactions will be settled under this system. The authorised dealer banks in the central bank’s India is now able to open vostro accounts in rupees. As a result, Indian banks are permitted to open special rupee Vostro accounts of correspondent banks in any country to settle trade transactions.
The invoices for the supply of goods or services from the overseas seller/supplier must be paid for by Indian importers who use this mechanism. The payment must be made in rupees and credited into the specific Vostro account of the correspondent bank of the partner country.
The balances in the designated special vostro account of the correspondent bank of the partner nation would be used to pay the export proceeds to Indian exporters who use this method to export products and services.
