NEW DELHI: Govt on Thursday tweaked provisions of the Foreign Trade Policy to make it easier for exporters to invoice overseas transactions and receive payments in Indian rupees.“All export contracts and invoices, other than those involving member countries of the Asian Clearing Union (ACU), shall be denominated either in foreign currency or Indian rupees. Export proceeds shall be realised either in any foreign currency or in Indian rupees,” the directorate general of foreign trade said in a notification. ACU includes 11 countries, including most Saarc nations, Belarus, Iran and Mauritius.It also said exports to any country, other than Nepal and Bhutan, for which export proceeds are realised in Indian rupees through banking channels will be eligible for export benefits and fulfilment of export obligations, on a par with any foreign currency. In the case of exports to Iran, there are additional policy prescriptions. Govt and RBI have been seeking to promote rupee trade in recent years but have not made much headway.Separately, RBI deputy governor Rohit Jain said that successful use of rupee for trade through special rupee vostro accounts will hinge on commercial viability, two-way trade corridors, correspondent banking ties, market-based rates and competitive conversion and hedging. Banks must also guide first-time users, deploy rupee balances productively and strengthen processes, anti-money laundering controls and operational resilience, he said.Trade think tank GTRI said DGFT’s amendment aligns the Foreign Trade Policy with RBI’s 2023 foreign-exchange regulations and rupee settlement may reduce conversion costs and help trade with countries facing dollar shortages.“The notification removes an important regulatory barrier but does not resolve the commercial difficulties surrounding rupee trade. Foreign buyers struggle to obtain rupees, while overseas banks may hesitate to hold large rupee balances because the currency is not fully convertible,” it added.
