📈 Sri Lanka & India Target US$ 6 Bn Rupee-Based Trade

Sri Lanka and India are driving a structural shift to convert their US$ 6 Bn annual bilateral trade into a local currency (Rupee-to-Rupee) system to lower transaction costs, eliminate conversion losses, and bypass US dollar volatility. • Overall Objectives: The framework intends to insulate bilateral trade from hard currency shocks. For Sri Lanka, it reduces immense pressure on scarce foreign exchange reserves, preserving dollars for essential imports like fuel, food, and medicine, while preventing an accumulation of dollar liabilities. • Policy & Banking Framework: Recent regulatory changes by the Reserve Bank of India (since late 2025) allow Colombo-based Indian bank branches to extend Indian Rupee (INR) loans directly to Sri Lankan importers. Sri Lankan banks can also borrow in INR to finance regional cross-border trade without utilizing the US dollar. • Strategic Value: Top officials, including Central Bank Governor Dr. Nandalal Weerasinghe and Indian High Commissioner Santosh Jha, highlighted this initiative as a move toward economic de-risking and integration. It aims to transform the commercial corridor into a highly efficient, digitally connected network. • Implementation Outlook: While the regulatory architecture is firmly in place, authorities acknowledge that adoption has been slower than expected. Shifting the momentum now relies heavily on institutional will, robust operational designs, and building private sector confidence among exporters and importers to successfully implement trade invoicing in Rupees.