In a strategic move to bolster the international use of its currency, India is considering allowing certain foreign investors to raise capital in rupees for investments in select countries. This initiative, aimed at enhancing the global presence of the Indian rupee, was revealed by a government official with direct knowledge of the plans.
The proposal follows Indian Finance Minister Nirmala Sitharaman’s announcement in July about simplifying foreign direct investment (FDI) and overseas investment regulations. The goal is to create more opportunities for using the Indian rupee in international investments.
The new provision would enable foreign investors from specific countries to raise capital in India in rupees, which they could then invest in their home countries. This approach will be implemented on a country-to-country basis, focusing on nations of strategic interest to India.
“The idea is to allow a foreign investor from a country to raise capital in India in rupees for investment in their country. We will allow this on a country-to-country basis,” the source tells.
This initiative is part of India’s broader strategy to promote the rupee as a preferred currency for international trade settlements, thereby reducing reliance on the US dollar. The finance ministry, which is currently discussing the plan, has yet to make an official comment.
To implement this plan, India will need to amend its Foreign Exchange Management Act (FEMA). Earlier this month, the government introduced changes to FEMA to simplify cross-border share swaps, facilitating global expansion for Indian businesses.
This potential policy shift underscores India’s ongoing efforts to attract more foreign investments and strengthen its economic ties with strategically important nations.