Source: BS
India has begun a gradual, long-term process to make the rupee more widely used in global trade and finance. While progress is modest so far, policymakers view it as the beginning of a multi-decade transformation.
Current Status
The Reserve Bank of India (RBI) now tracks how much of India’s trade is invoiced and settled in rupees.
- About 5% of India’s international trade is now conducted in rupees.
- FY26 (Apr–Dec):
- Exports invoiced in rupees: 6.08%
- Imports invoiced in rupees: 4.82%
- Settlements in rupees remain lower but are gradually rising.
These numbers are small but signal early movement away from exclusive reliance on hard currencies like the US dollar.
Why India Wants Rupee Internationalisation
- Reduce dependence on the dollar-based global system
- The Russia-Ukraine war and sanctions showed risks of being cut off from dollar payment systems like SWIFT.
- Lower exchange-rate risk for exporters
- Trading in local currency avoids volatility linked to dollar fluctuations.
- Enhance economic sovereignty
- Greater global use of the rupee strengthens India’s financial autonomy.
Key Policy Steps Taken
1. Local Currency Trade Arrangements
India has signed agreements with countries such as the UAE, Indonesia, Maldives, and Mauritius to settle trade in local currencies.
- Uses Special Rupee Vostro Accounts (SRVAs) for settlements.
- 83 banks from 35 countries have opened such accounts in India.
2. Incentives for Rupee Invoicing
Exporters receive equal benefits whether they invoice trade in rupees or dollars.
3. Expanding Offshore Rupee Use
- Non-resident Indians can hold rupee accounts abroad.
- NRIs in Nepal, Bhutan, and Sri Lanka can take rupee loans from overseas branches of Indian banks.
4. Integration into Global Financial Markets
Indian government bonds are being added to major global emerging-market indices — a key step toward wider rupee acceptance.
Risks and Concerns
Some fear wider rupee use could cause:
- Exchange-rate volatility
- Pressure on foreign exchange reserves
- Reduced monetary policy control
