The government has amended the foreign trade policy to allow international trade invoicing, payment and settlement in the Indian rupee.
The move activate the mechanism announced by the Reserve Bank of India (RBI) to facilitate trade in the domestic currency.
The Reserve Bank of India (RBI) had in July this year asked banks to put in place additional arrangements for export and import transactions in Indian rupees in view of increasing interest of the global trading community in the domestic currency.
To align the foreign trade policy (FTP) with this decision of the RBI, the Directorate General of Foreign Trade (DGFT), under the Union Ministry of Commerce and Industry, added a new paragraph in the FTP.
"Para 2.52 (d) is notified to permit invoicing, payment and settlement of exports and imports in INR (Indian rupee) in sync with RBI's ...circular dated July 11, 2022. This shall come into force with immediate effect," DGFT said in a notification.
The settlement of trade transactions in the rupee may also take place through special rupee vostro accounts opened by authorised dealer banks in India, it said.
According to the notification, domestic firms undertaking imports through this mechanism will make payment in the rupee, which will be credited into the special vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller/supplier.
"Indian exporters undertaking exports of goods and services through this mechanism shall be paid the export proceeds in INR from the balances in the designated special vostro account of the correspondent bank of the partner country," it added.
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