ASSOCHAM suggests strengthening of INR through gift city as a global financial hub and making it the currency of choice for international trade settlements
New Delhi : To strengthen the Indian Rupee and making it the currency of choice for international trade settlement, Industry body ASSOCHAM has submitted a detailed representation to the Government of India and RBI.
Through the transformation of GIFT City into a world-class global financial hub, ASSOCHAM has made two specific recommendations to strengthen the Indian Rupee.
First one relates to Global Family Office Hub. A dedicated policy and regulatory framework is required to attract global family offices, which collectively manage several trillion dollars in investible assets, to establish investment, treasury, and wealth management structures within GIFT City.
These institutions represent stable, patient, long-term capital. Attracting even a meaningful share of this universe to GIFT City would generate substantial and sustained capital inflows, deepen India’s financial markets, and contribute directly to the structural strengthening of the Indian Rupee and its foreign exchange reserves.
Secondly, under a globally competitive Corporate Treasury Centre framework within GIFT City, attract the treasury, cash pooling, foreign exchange management, and trade finance operations of multinational corporations, activities which are currently managed predominantly from Singapore, Dubai, London, and Hong Kong.
ASSOCHAM has recommended a rigorous benchmarking exercise against each of these competing centres, with the objective of designing a GIFT City offering that is demonstrably superior across regulatory, fiscal, and operational dimensions.
Assocham President, Shri Nirmal K. Minda said that a strong Indian Rupee is not merely an economic objective, it is a statement of India’s confidence in itself as a global economic power. GIFT City is India’s single most important instrument for attracting the long-term global capital that will structurally strengthen the Rupee.
Mr. Minda highlighted that today, the treasury operations of global corporations and the investment structures of the world’s great family offices are managed from Singapore, Dubai, and Hong Kong. There is no compelling reason- economic, regulatory, or strategic, why they should not be managed from GIFT City.
We urge the Government to give GIFT City the competitive framework it deserves, benchmarked against the world’s best international financial centres, to make this a reality without further delay, said Mr. Minda.
For making the Indian Rupee the currency of choice for international trade settlements, ASSOCHAM has identified a single, critical regulatory gap that is currently preventing the RBI’s Rupee trade settlement framework of July 2022 from reaching its full operational potential.
The absence of an explicit provision for cross-country fungibility of INR Vostro Account balances is causing Authorised Dealer banks to decline cross-country Rupee settlement transactions, defaulting to dollar settlement by regulatory inertia even where both commercial parties prefer the Rupee.
ASSOCHAM has called upon the Reserve Bank of India to issue a clarificatory circular explicitly providing that INR balances accumulated in Special Rupee Vostro Accounts may be freely utilised to settle payment obligations arising from Indian export or import transactions with parties in any country, subject to applicable KYC, AML, and documentation requirements. This is not a new policy, it is the operational completion of a framework the RBI has already built, requiring no legislative change and no relaxation of prudential norms.
Shri Nirmal K. Minda added that the Hon’ble Prime Minister’s vision that India must conduct its international trade in Indian Rupees, to the greatest possible extent, and on India’s own terms, is a vision whose time has fully come. The geopolitical conditions are uniquely favourable. India’s trading partners across BRICS, West Asia, ASEAN, and Africa are actively seeking alternatives to the dollar, and the Indian Rupee is the most credible alternative available
He highlighted that the Reserve Bank of India has already built the regulatory foundation through its landmark circular of July 2022. What is needed now is its operational completion and that requires nothing more than a single clarificatory circular from the RBI.
Mr. Minda mentioned that at India’s current import levels, shifting even 15% of commodity imports to Rupee settlement would reduce our structural dollar demand by approximately USD 70–80 billion annually. This is an opportunity of historic proportions, and ASSOCHAM urges the Government to seize it now, said Mr. Minda.
ASSOCHAM has further recommended that Merchanting Trade Transactions be explicitly brought within the INR settlement framework; that DGFT confirm the applicability of all export benefits to INR-settled transactions; and that bilateral Rupee settlement arrangements be expanded on a priority basis across BRICS, West Asia, ASEAN, Africa, and the Commonwealth of Independent States.
The two recommendations ASSOCHAM places before the Government today, empowering GIFT City and completing the Rupee trade settlement architecture, are not separate initiatives. They are two sides of the same coin. A thriving GIFT City attracts the global capital that structurally strengthens the Rupee. A Rupee that is widely used in international trade creates the settlement flows and financial depth that make GIFT City indispensable as Asia’s financial centre of choice.
Together, they constitute a coherent, mutually reinforcing strategy for the internationalisation of the Indian Rupee and for India’s emergence as a leading global economic and financial power.
The two priorities on which ASSOCHAM has made submission to the government and the central bank are complementary and mutually reinforcing, said Shri Nirmal Minda. He reiterated that ASSOCHAM is committed to working with the Government, the Reserve Bank of India, and NITI Aayog to make this vision a reality.
ASSOCHAM has also recommended that NITI Aayog establish a dedicated inter-ministerial working group on Rupee internationalisation to provide the whole-of-government coordination this agenda requires, and that the matter be placed on the agenda of the Prime Minister’s Economic Advisory Council.
