Internationalising the rupee: India's path must diverge from China

India's best path forward is to gradually ease its capital controls. The RBI and the government have taken meaningful steps since 2020, but more are needed

At its last policy meeting, the Reserve Bank of India (RBI) unveiled several measures to boost the rupee’s use in cross-border trade — a step towards its gradual internationalisation. The notion that an emerging economy’s currency can gain global traction took off after the International Monetary Fund added China’s renminbi (RMB) to its special drawing rights basket in 2016. Now, amid renewed geopolitical tensions involving the United States, Russia, and China, the question resurfaces: How can India meaningfully advance the rupee’s journey towards international status?

 

For the rupee to become an international currency, non-residents must