India is making a significant push towards increasing the global acceptance of its currency, the Indian Rupee (INR), by enabling international trade settlements in INR with nations facing currency failure or having a dollar shortage. The move comes as part of the country’s new Foreign Trade Policy (FTP), which also includes an amnesty plan for one-time default settlement of export obligations by Advance Authorization and Export Promotion Capital Goods (EPCG) authorization holders.
Commerce and Industry Minister, Piyush Goyal, expressed confidence that India’s ambitious target of achieving $2 trillion in exports by 2030 will be achieved, boosted by the FTP’s new measures. The government hopes that trading in INR will increase the currency’s global acceptance, eventually making it a major international currency alongside the US dollar, euro, and yen.
The use of INR in international trade will not only provide a boost to India’s economy but will also help countries that face currency failure or have a dollar shortage, as they can now use the INR to trade with India. By enabling trade in INR, India hopes to reduce the reliance on the US dollar in international trade and minimize currency risks, making it more attractive for foreign investors to invest in the country.
In addition to the INR push, the FTP has also consolidated the Special Chemicals, Organisms, Materials, Equipment, and Technologies (SCOMET) export policy for dual-use items in one place to facilitate industry compliance and comprehension. This measure is aimed at ensuring that Indian businesses can comply with export regulations and international standards while continuing to grow and expand in the global market.
The Indian government’s efforts to boost the INR’s global presence are a significant step towards India’s emergence as a global economic power. With a population of over 1.3 billion and a rapidly growing economy, India is poised to become one of the world’s largest markets. By increasing the acceptance of the INR and making it more accessible in international trade, India is laying the groundwork for its economic expansion and cementing its place as a major player in the global economy.
In conclusion, India’s new Foreign Trade Policy is a bold move aimed at increasing the global acceptance of the Indian Rupee and boosting India’s exports. By enabling international trade settlements in INR and consolidating export policies, India is making it easier for businesses to comply with regulations and grow in the global market. As India continues to grow and expand, its efforts to promote the INR’s global presence will play a crucial role in its emergence as a global economic power.
Despite the potential benefits of the INR’s increased global acceptance, there are also some challenges that need to be addressed. One of the main challenges is the lack of convertibility of the INR, which means that it cannot be freely exchanged for other currencies like the US dollar or euro. This can limit its use in international trade and investment, as businesses may prefer to use a more stable and widely accepted currency.
To address this challenge, the Indian government has taken several steps to liberalize the exchange rate regime and promote the convertibility of the INR. For instance, the Reserve Bank of India has gradually relaxed restrictions on foreign exchange transactions and allowed more flexibility in the exchange rate. The government has also introduced measures to attract foreign investment, such as allowing foreign investors to hold a higher stake in Indian companies and reducing restrictions on foreign portfolio investment.
Another challenge that needs to be addressed is the lack of awareness and understanding of the INR among businesses and investors. Many businesses may be hesitant to use the INR in international trade due to concerns about its stability and convertibility. To address this challenge, the government needs to raise awareness about the benefits of using the INR and promote its acceptance among businesses and investors.
Overall, India’s efforts to promote the INR’s global acceptance and increase compliance in the export industry are important steps towards its emergence as a major player in the global economy. However, to fully realize the potential benefits of these measures, the government needs to address the challenges of convertibility and awareness. With the right policies and strategies in place, India can become a major hub for international trade and investment and cement its place as one of the world’s leading economies.
