The Reserve Bank of India (RBI) has allowed 20 banks operating in the country to open 92 Special Rupee Vostro Accounts (SRVAs) of partner banks from 22 countries to invoice and pay in domestic currencies, the commerce ministry says.
On the issue of India expanding its ties with other countries in Indian currency, Minister of State for Commerce and Industry Som Parkash says in the Lok Sabha: "As on July 23, 2023, RBI has permitted 20 AD banks in India for the opening of 92 Special Rupee Vostro Accounts (SRVAs) of partner banks from 22 countries."
These countries are Bangladesh, Belarus, Botswana, Fiji, Germany, Guyana, Israel, Kazakhstan, Kenya, Malaysia, Maldives, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles, Singapore, Sri Lanka, Tanzania, Uganda, and the United Kingdom.
Further, an MoU has been signed between the Reserve Bank of India and the Central Bank of UAE on July 15, 2023, which would enable exporters and importers to invoice and pay in respective domestic currencies enabling the development of a bilateral foreign exchange market, says the minister.
He also says India is focusing on higher quality goods, in line with Prime Minister’s call for “Zero Defect- Zero Effect” manufacturing. "Quality Control Order (QCO) and Compulsory Registration Order (CRO) as per BIS Conformity Assessment Regulations, 2018, are issued to enhance the quality of the domestically manufactured products, curb the imports of sub-standard products into India, and prevent unfair trade practices with the objective of ensuring the protection of human, animal or plant health and safety of the environment."
The RBI this year in February had allowed invoicing and payments for international trade in Indian Rupee and put in place the arrangement to promote the growth of global trade, with emphasis on exports from India and to support the increasing interest in INR. The framework is applicable to any partner country seeking to undertake trade with India in INR.
Before that, the Directorate General of Foreign Trade (DGFT) introduced a provision in the Foreign Trade Policy to allow for International Trade Settlement in INR i.e., invoicing, payment, and settlement of exports/imports in Indian rupees. Changes have also been introduced in the Foreign Trade Policy to grant export benefits and fulfillment of Export Obligation for export realisations in INR as per RBI guidelines, the minister states.
As reported by Fortune India this month, one of the primary roadblocks for the rupee to grow in international stature is India’s poor share in global trade (1.6%). The pie is unlikely to grow because India has erected import barriers that dampen exports and is chasing bilateral FTAs – individual countries with relatively smaller shares of global output and trade – while the rest of the world is converging with mega multilateral FTAs like the RCEP, IPEF, and CPTPP. Members of these mega trade blocs contribute the most to global GDP and trade.
