The Union government plans to change its foreign trade policy (FTP) soon to allow exporters to enjoy export benefits while settling commerce in rupees. Following the Reserve Bank of India’s (RBI) announcement of a system to settle foreign trade transactions in local currency, exporters have demanded that the Ministry of Commerce and Industry provide clarification on the topic.
Except in the instance of Iran, our FTP states that export incentives such as the Rebate of State and Central Taxes and Levies (RoSCTL) and Remission of Duties and Taxes on Export Products (RoDTEP) are not available for settling trade in rupees. Because the RBI has said that commerce can be conducted in rupees with any country, a change in (foreign trade) policy is required, according to Mr. Khalid Khan, vice-president of the Federation of Indian Export Organizations (FIEO).
Exporters have applauded the move, saying it will facilitate commerce, particularly with sanctioned countries like Russia. Only two banks in Iran, which is also subject to US sanctions, were permitted to handle trade transactions in rupees: IDBI Bank and UCO Bank. They claim that if the central bank’s proposed mechanism is properly executed, it will promote India-Iran commerce.
