The Centre on Wednesday informed that it has made some amendments in the foreign trade policy to allow for international trade settlement in Indian rupees for the Export Promotion Schemes.
Accordingly, the Directorate General of Foreign Trade (DGFT) had earlier introduced some amendments to permit invoicing, payment and settlements of exports and imports in rupee in sync with RBI’s circular issued on July 11, 2022, the Ministry of Commerce said in a statement.
In July, the RBI in a circular to authorised dealer banks said that in order to promote the growth of global trade with emphasis on exports from India and to support the increasing interest of the global trading community in the rupee, it had been decided to put in place an additional arrangement for invoicing, payment, and settlement of exports and imports in Indian rupee.
The ministry today said that in continuation to the above notification, changes have been introduced in the Foreign Trade Policy for the grant of export benefits, incentives, and fulfillment of the export obligations under the policy for export realisations in Indian Rupees as per the RBI guidelines.
"Given the rise in interest in the 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," the ministry said.
The RBI in its notification issued in July had explained how the settlement of trade transactions under this arrangement will take place. The central bank said the authorised dealer banks in India have been permitted to open rupee vostro accounts.
Accordingly, for settlement of trade transactions with any country, the banks in India may open special rupee Vostro accounts of correspondent bank/s of the partner trading country.
The Indian importers undertaking imports through this mechanism shall make payment in the rupee 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.
The Indian exporters, undertaking exports of goods and services through this mechanism, shall be paid the export proceeds in rupee from the balances in the designated special vostro account of the correspondent bank of the partner country.
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