Exporters undertaking overseas shipments of goods and services through this mechanism will be paid the export proceeds in Indian rupees from the balances in the designated special vostro account.
In a move aimed at facilitating trade in the domestic currency, the Narendra Modi government on Wednesday allowed international trade settlements in Indian rupees for export promotion schemes under the Foreign Trade Policy (FTP).
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The Ministry Of Commerce and Industry stated, "The government of India has made suitable amendments in the Foreign Trade Policy and Handbook of Procedures to allow for international trade settlement in Indian rupees."
"Given the rise in interest in internationalisation of the Indian Rupee, the given policy amendments have been undertaken to facilitate and to bring ease in international trade transactions in Indian rupees," it said.
The ministry added that the changes have been notified for international trade, export performance for recognition as status holders, realisation of export proceeds under advance authorisation and duty-free import authorisation schemes, and realisation of export proceeds under the Export Promotion Capital Goods scheme.
Back in July, the central bank, in a circular, said it has put in place additional arrangements for export and import transactions in Indian rupees in view of the increasing interest of the global trading community in the domestic currency.
The RBI said, "For settlement of trade transactions, the concerned banks will require special rupee vostro accounts of correspondent bank/s of the partner trading country."
"Indian importers undertaking imports through this mechanism shall make payment in INR which shall 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," it said.
Exporters undertaking overseas shipments of goods and services through this mechanism will be paid the export proceeds in Indian rupees from the balances in the designated special vostro account. This mechanism may enable Indian exporters to receive advance payment against exports from overseas importers in rupees.
As per the circular, the rupee surplus balance held can be used for permissible capital and current account transactions with mutual agreement.