India’s trade regulator has revised export-payment rules to encourage greater use of the Indian rupee in international transactions. The Directorate General of Foreign Trade (DGFT) updated the Foreign Trade Policy effective immediately, allowing export contracts, invoices and payments with countries outside the Asian Clearing Union (ACU) to be either rupee-denominated or in foreign currencies.
Previously, export proceeds in most cases had to be received in freely convertible currencies, even though invoicing in rupees was sometimes permitted. Under the new DGFT guidance, export receipts received in rupees through approved banking channels will now be treated the same as foreign-currency earnings for the purpose of trade-policy benefits and will count toward exporters’ policy obligations.
The rule change applies broadly but excludes Nepal and Bhutan, which operate under separate arrangements. For the members of the Asian Clearing Union - identified as Bangladesh, Iran, Maldives, Myanmar, Pakistan and Sri Lanka - contracts generally need to use the currencies determined by the ACU unless Reserve Bank of India (RBI) directives provide otherwise.
The policy tweak formalizes and extends the practical scope of measures the RBI introduced in 2023 that permitted wider use of the rupee in cross-border transactions. The ACU framework itself is designed to allow periodic net settlement of trade obligations among members, which reduces the requirement for repeated foreign-exchange transfers and affects how currencies are used within that bloc.
By recognising rupee export receipts as eligible for trade-policy incentives when handled through authorised banking channels, the DGFT has removed a procedural obstacle that had limited the rupee’s usability for exporters dealing with countries outside the ACU. The new approach leaves intact distinct settlement practices for ACU members and the exceptional arrangements for Nepal and Bhutan.
This change is procedural and regulatory in nature; it expands the formal eligibility of rupee receipts for trade benefits but does not alter the established ACU settlement mechanisms nor the special arrangements that apply to Nepal and Bhutan. Exporters who choose to invoice and settle in rupees must continue to use approved banking channels to ensure their receipts are recognised for policy purposes.
Implications at a glance
- Exporters to countries outside the ACU can now receive and settle payments in rupees and still claim trade-policy benefits, subject to banking-channel processing.
- The change aligns DGFT practice with the RBI's 2023 rules that enabled broader rupee use in cross-border trade.
- ACU members and the countries of Nepal and Bhutan remain subject to their respective settlement rules and exceptions.