In a bid to boost exports amid the global economic slowdown and currency crises in many countries, the new foreign trade policy (FTP) has unveiled measures to ease trade settlement in rupees with such nations, as well as to strengthen the rupee payment system.
“If there are countries where there is any currency failure or they are having dollar shortages or international currency shortages, we are willing to trade in rupee with them, which will take not only our exports forward but also disaster-proof those countries,” said commerce secretary Sunil Barthwal on Friday, after the unveiling of the foreign trade policy 2023.
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With an aim to make the Indian rupee
Barthwal further said the FTP also focusses on the strength of the rupee payment system and digital payments. “You must have seen that a huge amount of remittances are now coming to the digital payment mechanisms. So, we are saying that we will ‘disaster-proof’ these countries, which are facing problems, so that our exports don’t suffer. We will push our exports with rupee trade even if they are facing currency issues,” he said.
The FTP seeks to increase India’s exports to $2 trillion by 2030 from a targeted $770 billion this fiscal.
Santosh Sarangi, director-general, Directorate General of Foreign Trade, said the move will help countries facing foreign currency issues and will encourage higher transactions with India. “Until now, banks of over 18 countries have opened special Vostro accounts and 30 Vostro accounts have been opened. Going forward, we expect a lot of transactions using these Vostro accounts,” he said on the sidelines of the launch.
With the domestic currency under pressure following Russia’s invasion of Ukraine in February last year, India had proposed the rupee trade mechanism last year.
By a circular issued on July 11 last year, the RBI had allowed invoicing and payments for international trade in the Indian rupees and had put up a framework for any partner country seeking to undertake trade with India in rupees. Banks of such countries may approach authorised dealer banks in India, which in turn may seek approval from the RBI with details of the arrangement. Amendments had also been made in the FTP for this.
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According to a recent reply by minister of state for commerce & industry Anupriya Patel in the Lok Sabha, approvals have been granted by the RBI to domestic and foreign AD Banks in 60 cases for opening of special rupee Vostro accounts (SRVAs) of correspondent banks from 18 countries. These include Botswana, Fiji, Germany, Guyana, Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles, Singapore, Sri Lanka, Tanzania, Uganda and the UK.