India to push rupee investments in Sri Lanka

The Indian government is working on operationalizing Rupee investments in Sri Lanka in a move to boost Indian investments in its southern neighbour, two people aware of the matter told Mint.

The Indian government is working on operationalizing Rupee investments in Sri Lanka in a move to boost Indian investments in its southern neighbour, two people aware of the matter told Mint.

Rupee investments will ease the way for Indian firms to enter the Sri Lankan markets, the people mentioned above said, speaking under the condition of anonymity.

During FY 2023, the Reserve Bank of India (RBI) allowed invoicing and payments for international trade in the Indian Rupee.

This allowed exports and imports to be denominated and invoiced in Indian rupees, with the settlement of trade transactions taking place in the currency.

The RBI’s decision is aimed at promoting the growth of global trade, especially Indian exports, apart from systematically internationalizing the currency. India wants the Indian Rupee to be a hard currency in the future, the second person mentioned above said.

India now hopes to work with Sri Lankan to make it easier for Indian firms to invest in the island nation.

“At present, Indian investors invest in the country through international currencies like the dollar, which is more cumbersome and involves conversion costs,” said one of the persons cited above.

“Rupee investments will ease the way for Indian firms to enter the Sri Lankan markets. The ministry of external affairs (MEA), in particular, is learnt to be pushing for this change,” the person added.