India Shifts Away from US Dollar and towards Rupee
The India rupee is at the center of the country’s new Foreign Trade Policy 2023. The policy aims to establish the rupee as a global currency, boost trade and manufacturing, and shift away from the US dollar. It will come into effect on April 1. It also seeks to raise the country’s outward shipments to $2tn by 2030.
How the India rupee fits the Foreign Trade Policy
Under the new policy, India will facilitate the use of the rupee as an alternative currency for trade with countries facing a shortage of dollars. According to Commerce Secretary Sunil Barthwal, this move aims to help “disaster proof” these countries against currency risks. In addition, the policy expands the FTP benefits to ecommerce exports and doubles the value limit for exports through courier. It also creates a designated zone with a warehousing facility. This zone helps ecommerce aggregators with stocking, customs clearance, and returns processing.
In the unveiling of the new foreign trade policy for 2023-28, one of the main goals of the new trade strategy, according to Barthwal, is to “encourage” the internationalization of the rupee. According to commerce and industry minister Piyush Goyal, another goal is to increase the Indian exports of goods and services to $2 trillion by 2030.
Rupee trade with Malaysia
“Trade between India and Malaysia can now be settled in Indian Rupee (INR) in addition to the current modes of settlement in other currencies. This follows the decision by the Reserve Bank of India in July 2022 to allow the settlement of international trade in the Indian Rupee (INR),” the Ministry of External Affairs announced.
“This initiative by the Reserve Bank of India (RBI) is aimed at facilitating the growth of global trade and to support the interests of the global trading community in Indian rupees, “ it further said.
Bangladesh eyes rupee trading
In addition, Bangladesh is also eyeing to start trading with India using INR. The ministry of commerce placed a written recommendation at the last cabinet meeting regarding the possibility and opportunity of using rupee instead of dollar.
“The use of rupee will start with Bangladesh’s $2 billion trade with India. Bangladesh Bank has almost finished all kinds of trials in this regard. Trading in rupee will be introduced in both countries only after bilateral decision on some issues,” an executive director of Bangladesh Bank said.
Key takeaways
- The Foreign Trade Policy 2023 aims to establish the rupee as a global currency.
- India seeks to raise outward shipments to $2tn by 2030.
- Trade between India and Malaysia can now be settled in Indian Rupee.
- Bangladesh is also eyeing trade with India using INR.
Related reading on Creative Geniusess
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- Saudi Arabia Joins Shanghai Cooperation with China, Russia, India, Pakistan, and more
Learn more about the currency on Wikipedia.
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