Can the Rupee Power More of India’s Trade Soon

India is pushing rupee settlement with key partners by setting direct INR rates for currencies like the UAE dirham and Indonesia rupiah, and by simplifying the rules for Special Rupee Vostro Accounts so banks and businesses can invoice and pay in rupees more easily and at lower cost. This reduces reliance on third currencies, cuts conversion spreads, and supports trade resilience during dollar tightness while aligning with India’s 2047 goals and wider FTA talks that now include rupee invoicing as a deliverable. The RBI’s FAQs and recent circulars clarify benefits and expand uses of SRVA balances, so counterpart banks can manage liquidity better and scale regular rupee trade flows across more corridors.

The plumbing began in 2022 with the RBI’s framework for international trade settlement in INR, which enabled invoicing, payment, and settlement via SRVAs held by foreign banks in India under standard FEMA rules and documentation. Policy updates in 2025 widened SRVA balance uses beyond government securities to instruments like corporate bonds and commercial paper, and eased approvals for opening SRVAs, which makes participation smoother for partner banks. Parallel steps like extending export proceeds timelines in IFSC accounts and permitting INR lending to neighbours add flexibility to trade financing and deepen the rupee’s regional role.

On the ground, direct INR pairs reduce the need to triangulate through the dollar, so banks can quote tighter prices and settle faster, and firms face less working capital uncertainty when markets are volatile. Uptake should be strongest where two way trade is balanced and where partners value reduced dollar exposure, including FTA channels in West Asia and Southeast Asia now actively discussing rupee invoicing. Authorities are also pacing the rollout alongside routine currency management, focusing on convenience and multi currency stability while the rupee navigates external pressures and capital flow swings this year.