Lok Sabha Question No. 312 (STARRED), answered on 2022-08-08
Subject: International Trade Settlement in INR
Ministry: FINANCE
Asked by: Kirti Vardhan Singh, S. Ramalingam

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA

## STARRED QUESTION NO. * 312

ANSWERED ON MONDAY THE 8 th  AUGUST, 2022/ SRAVANA 17, 1944 (SAKA)

## INTERNATIONAL TRADE SETTLEMENT IN INR

## *312: SHRI KIRTI VARDHAN SINGH: SHRI RAMALINGAM S:

Will the Minister of FINANCE be pleased to state:

- (a) whether  the  Government  is  contemplating  to  introduce  Indian  National Rupee (INR) for international trade settlement as a mechanism;
- (b) if so, the details thereof and the benefits the country would achieve from this move;
- (c) the extent to which the launch of international trade in Indian Rupee would help traders, exporters, importers and the exchequer;
- (d)  whether this decision will help reduce the country's trade deficit caused by many imports from various countries;
- (e) if  so,  the  details  thereof  along  with  the  time  by  which  it  is  likely  to  be implemented; and
- (f)  whether  the  Government  has  introduced  trading  in  Rupee  with  those countries also with which it has trade deficit other than those from where oil is imported and if so, the details thereof?

## ANSWER

FINANCE MINISTER

(SMT. NIRMALA SITHARAMAN)

- (a) to (f): A Statement is laid on the Table of the House.

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STATEMENT REFERRED IN REPLY TO LOK SABHA STARRED QUESTION NO. *312 FOR 8th AUGUST  2022 ON 'INTERNATIONAL TRADE SETTLEMENT IN INR'  TABLED  BY  SHRI  KIRTI  VARDHAN  SINGH,  SHRI  RAMALINGAM  S MEMBERS OF PARLIAMENT

(a) : Yes, Sir. The Reserve Bank of India (RBI) has allowed invoicing and payments for  international  trade  in  Indian  Rupee  vide  A.P  (DIR  Series)  Circular  No.  10 RBI/2022-2023/90  dated  11.07.2022  on  'International  Trade  Settlement  in  Indian Rupees (INR)'. (b) and (c) :  The broad framework for cross-border trade transactions in INR under the Foreign Exchange Management Act, 1999 (FEMA) has been delineated by RBI in  the  said  Circular  dated  11.07.2022.  The Circular  lays  down  that  all  exports and imports under the arrangement may be denominated and invoiced in Rupee (INR), the exchange rate between the currencies of the two trading partner countries may be market determined, and the settlement of trade transactions under the arrangement shall take place in INR in accordance with the procedure laid down in the  Circular.  RBI  has  put  in  place  the  arrangement  for  invoicing,  payment,  and settlement of exports / imports in INR in order to promote growth of global trade with emphasis  on  exports  from  India  and  to  support  the  increasing  interest  of  global trading community in INR. (d) and (e) : As mentioned above, RBI has put in place the arrangement in order to promote growth of global trade by reducing the dependence on hard currency, with emphasis  on  exports  from  India  and  to  support  the  increasing  interest  of  global trading community in INR. The increase of exports may help reduce the trade deficit. (f) :  The  framework  put  in  place  by  RBI  for  allowing  invoicing  and  payments  for international trade in INR is applicable for any partner country seeking to undertake trade with India in INR in terms of RBI's Circular dated 11.07.2022. In terms of Para 10 of RBI's Circular, the approval process is that for opening of Special INR Vostro accounts, banks of partner countries may approach Authorized Dealer (AD) banks in India  which may seek approval from RBI with details of the arrangement. The AD bank  maintaining  the  Special  INR  Vostro  Account  is  required  to  ensure  that  the correspondent bank is not from a country or jurisdiction in the updated FATF Public Statement on High Risk & Non-Co-operative Jurisdictions on which FATF has called for counter measures.

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