The Directorate General of Foreign Trade (DGFT) on Thursday, 20 August amended the Foreign Trade Policy (FTP) 2023 to allow export contracts, invoices, and payments with non-Asian Clearing Union (ACU) countries to be denominated and settled in Indian rupees or foreign currencies — a move designed to make rupee-denominated exports eligible for trade policy benefits and advance India's push to internationalise its currency.

Key Changes Under the Revised Rules

The amendments, notified with immediate effect, align the FTP 2023 with foreign-exchange regulations issued by the Reserve Bank of India (RBI) in 2023. Under the revised framework, exporters selling to countries outside the ACU bloc can now denominate contracts and invoices in Indian rupees or any foreign currency and receive payments accordingly through approved banking channels.

Crucially, rupee payments received via approved banking channels will now count towards fulfilling export obligations and qualify for benefits under the Foreign Trade Policy — removing a long-standing ambiguity over whether rupee-denominated receipts would receive parity with foreign-currency earnings.

EXIM Bank and Lines of Credit

Exports financed through EXIM Bank or Government of India lines of credit can also now be invoiced in Indian rupees, broadening the scope of rupee settlement across state-backed trade finance instruments.

ACU Member Countries: Separate Framework

The rules differ for the Asian Clearing Union member states. For exports to Bangladesh, Iran, Maldives, Myanmar, Pakistan, and Sri Lanka, contracts must use currencies determined by the ACU, though invoicing and settlement may also follow RBI directions. Nepal and Bhutan are treated separately, with export contracts generally required to be denominated and settled in Indian rupees or per RBI guidelines. Trade with Iran remains subject to restrictions on sensitive goods and technologies under the FTP.

Impact on Exporters and Rupee Internationalisation

The policy shift could reduce the need for currency conversion for Indian exporters, potentially lowering associated costs and exchange-rate risks. It also offers an alternative payment channel for trade with countries facing US dollar shortages or difficulties accessing established international payment systems — a category that has grown notably in recent years amid global sanctions and dollar liquidity pressures.

This comes amid India's broader, multi-year effort to settle more cross-border transactions outside the dollar system. The RBI had issued a framework for rupee trade settlement in 2022, and Thursday's DGFT amendment represents a significant step in embedding that framework within the country's formal trade policy architecture. As global trade architecture continues to shift, the policy puts rupee settlement on a more competitive footing for Indian exporters going forward.