New Delhi – India has taken a bold step toward reshaping financial dynamics within the BRICS bloc, issuing an official circular instructing member nations to shift cross-border trade settlements away from the US dollar and into the rupee. The move underscores New Delhi’s intent to strengthen its currency’s role in international trade while countering mounting trade pressures from Washington.
The Reserve Bank of India (RBI) announced on Tuesday, August 13, that national banks are to expand the opening of Vostro accounts without prior approval. This mechanism enables imports and exports to be settled directly in rupee, bypassing the need for dollar-denominated transactions. By simplifying regulatory procedures, India aims to accelerate adoption of the rupee across global trade partners.
The timing is significant, coming just a week after US President Donald Trump imposed a 50 percent tariff on Indian products. Prime Minister Narendra Modi’s administration views the shift as both a financial safeguard and a geopolitical response to U.S. trade measures, while simultaneously boosting the rupee’s stability.
Beyond BRICS, India has also circulated similar directives to non-member countries, encouraging them to embrace rupee settlements in cross-border transactions. According to the RBI, this arrangement mirrors correspondent banking systems and is expected to provide India and its partners with greater resilience against tariff shocks and dollar fluctuations.
Foreign companies are no longer required to seek special RBI approval to open Vostro accounts, though compliance with Know Your Customer (KYC) standards remains mandatory. The RBI emphasized that the policy will strengthen rupee inflows, stabilize exchange rates, and allow the currency to be priced more dynamically in global markets.
The decision aligns India with other BRICS members, including Russia, China, and Brazil, who are also advancing the use of local currencies in trade as part of a collective strategy to build a more multipolar financial order. By promoting local currencies, the bloc seeks to reduce vulnerability to external sanctions and increase autonomy in global commerce.
While implementation will take time, analysts suggest the move could mark a turning point in regional trade practices. For India, the immediate objective is to enhance its bargaining power in international markets while positioning the rupee as a viable settlement currency. For BRICS, the broader ambition is to build an alternative framework to the dollar-centric global financial system.
If sustained, India’s initiative may not only alter intra-BRICS trade flows but also accelerate the group’s collective push toward redefining the rules of global finance.
