The government on Thursday put export earnings received in Indian rupees on the same footing as those received in freely convertible currencies such as the US dollar and euro for availing benefits under the Foreign Trade Policy (FTP), in a move that could encourage greater use of the rupee in international trade.The government has allowed eligible rupee export earnings to qualify for FTP benefits on par with receipts in freely convertible currencies (AFP)Rupee export receipts get parity with foreign-currency earningsThe change means eligible exporters receiving payment in rupees through approved banking channels will be able to claim FTP benefits and count those receipts towards their export obligations, as they would with eligible foreign-currency earnings.The Directorate General of Foreign Trade (DGFT) amended the FTP 2023 with immediate effect, aligning its provisions with the Reserve Bank of India’s Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023.The facility for rupee-denominated export transactions was first introduced in November 2022. Thursday’s notification expands its scope and aligns it with the FTP introduced in April 2023.Also read: Indian rupee hit by oil worries; outlook bearish despite RBI-spurred inflowsMove could make rupee settlements more attractive for exportersThe move could make rupee settlement more attractive for Indian exporters by reducing currency-conversion costs and exchange-rate risks. It could also help expand trade with countries facing shortages of dollars or difficulties accessing established international payment systems.Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), said the notification “removes uncertainty” and “places eligible rupee export receipts on par” with foreign-currency earnings.“Earlier, exporters receiving rupee payments through an RBI-approved banking channel were not always certain whether such receipts would qualify for FTP benefits or count toward their export obligations. The new rules remove this uncertainty by placing eligible rupee receipts on par with foreign-currency earnings,” he said.Also read: How does the world see India? | Number TheoryThe broader significance is that Indian exporters and overseas buyers now have greater scope to settle transactions in rupees rather than relying on the dollar or another freely convertible currency, Srivastava said.Experts say wider adoption needs stronger support systemBut the policy change by itself will not lead to large-scale rupee trade, he cautioned.“Foreign buyers must be able to obtain rupees easily, while overseas banks need practical options to use, invest, convert or repatriate their balances,” he said.India would need country-specific settlement arrangements, simpler banking procedures, affordable hedging, rupee-based export credit and export-credit insurance to make rupee settlement commercially viable, Srivastava said.Also read: The RBI is emerging as an Asian rate outlier. Five charts show why“Without this supporting system, rupee invoicing may remain a useful facility rather than becoming a widely used trade option,” he added.ACU, Nepal and Bhutan transactions retain separate rulesThe rules continue to provide separate treatment for countries covered by the Asian Clearing Union (ACU), as well as Nepal and Bhutan.For ACU members, contracts generally have to be denominated in an ACU-approved currency, subject to applicable RBI directions.The latest notification brings the trade-policy framework in line with the RBI’s 2023 foreign-exchange regulations, which widened the scope for using the rupee in cross-border trade.