Decoding India's new foreign trade policy that lets exporters invoice, get paid in Rupees

The Narendra Modi government has amended the Foreign Trade Policy (FTP) 2023 to make it easier for exporters to invoice overseas sales and receive payments in Indian rupees, a move aimed at promoting wider use of the local currency in global trade and reducing transaction costs and risks for Indian businesses.

The Directorate General of Foreign Trade (DGFT) issued Notification No. 30/2026–27, amending Paras 2.52 and 2.53 of the FTP with immediate effect, aligning rules on export invoicing and realisation with the Reserve Bank of India's existing foreign exchange regulations.

The changes put eligible rupee export receipts on par with foreign-currency earnings for FTP benefits and export obligations, removing a key hurdle that had previously discouraged exporters from invoicing in rupees.

What do the revised rules say?

Under the revised rules, exporters selling to countries outside the Asian Clearing Union (ACU) can now denominate export contracts and invoices in Indian rupees or any foreign currency, with export payments also allowed in either currency. Previously, export proceeds generally had to be received in a freely convertible currency, creating uncertainty over whether rupee receipts would qualify for trade-policy benefits.

The amendment clarifies that eligible rupee payments for exports to any country other than Nepal and Bhutan will now qualify for benefits under the FTP and count towards the fulfilment of export obligations, provided the transactions are routed through authorised banking channels. Rupee earnings received through approved banking channels will therefore be treated on par with export payments received in foreign currency, economic think tank Global Trade Research Initiative (GTRI) said.

A key change is that eligible rupee payments received through approved banking channels will now qualify for benefits under the Foreign Trade Policy and count towards fulfilment of export obligations. This means exporters can now invoice and receive payments in rupees without losing access to incentives such as duty credit scrips, export promotion schemes or compliance with export obligations under various trade agreements.

GTRI noted that exports financed through EXIM Bank or Government of India lines of credit may also be invoiced in Indian rupees, further expanding the scope of rupee-based trade. The move is expected to reduce currency conversion costs and exchange rate risks for Indian exporters, particularly those dealing with trading partners who are open to settling transactions in rupees.

Does this apply to exports to all countries?

The amended policy applies to exports to all countries, but with specific rules for members of the Asian Clearing Union (ACU), a regional payment arrangement that facilitates transactions in local currencies among member central banks. For exports to Bangladesh, Iran, Maldives, Myanmar, Pakistan and Sri Lanka, contracts must be denominated in a currency determined by the ACU, while invoicing and settlement will continue to be governed by RBI directions.

Nepal and Bhutan are treated separately, with export contracts denominated and settled in Indian rupees or in accordance with RBI directions. Iran is also covered by the ACU framework, but trade in sensitive goods and technologies will continue to be governed by paragraph 2.19 of the FTP.

For countries outside the ACU, exporters can now denominate contracts and invoices in any foreign currency or Indian rupees, with export payments also allowed in either currency. This flexibility is expected to encourage more exporters to explore rupee-based settlements, particularly with trading partners in regions where the rupee is gaining traction as a settlement currency.

How does this reduce costs and risks for Indian exporters?

The policy change is expected to reduce transaction costs and exchange rate risks for Indian exporters by allowing them to invoice and receive payments in rupees, rather than having to convert foreign currency receipts into rupees. This could be particularly beneficial for exporters dealing with countries that have limited access to hard currencies or where dollar settlements are costly or cumbersome.

By enabling rupee invoicing and settlements, the government aims to make Indian exports more competitive and reduce the dependency on the US dollar for trade transactions. The move also aligns with India’s broader efforts to internationalise the rupee and promote its use in cross-border trade and investment.

The amendment is part of India’s ongoing push to internationalise the rupee and reduce the country’s reliance on the US dollar for trade settlements. By making it easier for exporters to invoice and receive payments in rupees, the government hopes to encourage more trading partners to settle transactions in the Indian currency, thereby boosting its global footprint.

The move comes as India has been signing bilateral trade agreements and currency swap arrangements with several countries to facilitate rupee-based trade. The government has also been working with banks and financial institutions to develop the necessary infrastructure for rupee settlements, including the establishment of special rupee accounts and the expansion of rupee clearing mechanisms.

What do experts say about Foreign Trade Policy amendment?

Experts say the policy change is a significant step towards making the rupee a more widely accepted currency in international trade, but its success will depend on the willingness of foreign buyers and banks to adopt rupee settlements. The government will need to continue working with trading partners and financial institutions to build confidence in the rupee and address any operational or regulatory hurdles that may arise.

Industry bodies and exporters have welcomed the policy change, saying it will provide greater flexibility and reduce costs for businesses engaged in overseas trade. The amendment removes uncertainty over whether rupee receipts would qualify for trade-policy benefits, making it easier for exporters to explore rupee-based settlements.

However, some experts caution that the wider adoption of rupee invoicing will depend on the willingness of foreign buyers and banks to accept rupee payments. While the policy change is a positive step, its impact will be limited if trading partners are not open to settling transactions in rupees.

The government will need to continue engaging with trading partners and financial institutions to promote the use of the rupee in cross-border trade and address any operational or regulatory challenges that may arise. The success of the initiative will also depend on the development of robust infrastructure for rupee settlements, including the expansion of rupee clearing mechanisms and the establishment of special rupee accounts.