With India preparing to start full-fledged rupee trade with Russia and also engaging in talks with some other countries, such as the UAE and Sri Lanka, for a similar arrangement, the Centre is likely to soon come out with a notification allowing exporters to enjoy all existing export benefits, such as input duty reimbursement schemes, even if they are not earning foreign currency, an official tracking the matter has said.

Moreover, exporters, who have imported under various schemes with export obligations, may be allowed to fulfil the obligation in Indian rupee against imports made in free foreign currency, if they have exported under the rupee trade mechanism, the official told businessline.

Shouldn’t be excluded

“To encourage exporters to participate in the rupee trading mechanism, it is important to ensure that they do not get excluded from various existing schemes if they earn in rupee. Notifications for the same are likely to be issued very soon. The Commerce Ministry, Finance Ministry and the RBI are in talks on the matter,” the official said.

In July this year, the RBI issued a circular allowing invoicing, payment, and settlement of exports and imports in Indian rupee. The RBI said that the idea was to promote growth of global trade with emphasis on exports from India and to support the increasing interest of global trading community in Indian rupee. The move would serve the double purpose of dealing with countries saddled with Western sanctions such as Russia, which has been targetted by the US and the EU for its continued aggression in Ukraine, as well as helping India get over its problem of depleting foreign currency reserve.

“Exporters, through various representations, have been stressing on the need for clarity on continuation of various schemes such as the Remission of Duties and Taxes on Exported Products (RoDTEP). They have also sought acceptance of export obligation in Indian rupee for items imported under various schemes. The government is mostly of the view that these are valid expectations that need to be met,” he said. 

India’s engagement with Russia for establishing a rupee-denominated trading mechanism is at an advanced stage with the RBI giving its approval to UCO Bank to open a special Vostro account with Russia’s Gazprombank. Two Russian banks, Sberbank and VTB Bank have already opened a special vostro account in their respective branches in Delhi, according to media reports.