Remarks by High Commissioner of India H.E. Shri. Santosh Jha during the event ‘Rupee to Rupee: Strengthening the India-Sri Lanka Commercial Corridor’; 

15 June 2026, Colombo

Dr Nandalal Weerasinghe, Governor, Central Bank of Sri Lanka 

Distinguished guests, heads of treasury, representatives of chambers of commerce, exporters, importers, colleagues from the think tank and media communities,

Good afternoon, and a very warm welcome to what I believe is a conversation whose time has well and truly come.

The title of today's roundtable — Rupee to Rupee — is simple. It represents a fundamental rethinking of how two of South Asia's most closely connected economies conduct their commercial relationship. And I am genuinely excited to be part of that conversation.

Let me begin with what may seem like an obvious question: why does the currency of settlement matter, as long as goods and services are moving?

It matters enormously. Every time an Indian exporter invoices in US dollars, and every time a Sri Lankan importer pays in US dollars, both sides are carrying unnecessary currency risk, paying unnecessary conversion costs, and adding a layer of dependency on a third-country currency that neither of them issues, controls, or in some cases, finds easy to acquire.

De-risking and diversification is key in today’s global context. Relying on any one predominant mode of transaction in a highly disruptive world is extremely high risk. There is a need to bring in new nodes of resilience. 

For Sri Lanka, this is not an abstract concern. The 2022 economic crisis was, at its core, a foreign exchange crisis. When dollar reserves ran out, the entire economy- fuel, medicine, food imports- were impacted. For decades, trade between our two countries has been intermediated through the US dollar, adding cost at every step.

Local currency settlement changes that calculus. It reduces transaction costs. It eliminates conversion losses in both directions. It insulates bilateral trade from dollar volatility. And for Sri Lanka specifically, it reduces pressure on scarce hard currency reserves — preserving dollars for uses where they are truly necessary, while rupee-to-rupee trade flows freely between our two economies.

The good news is that the policy architecture is moving in exactly the right direction. The Reserve Bank of India has been methodically building the infrastructure for global INR acceptance over the past three years. The Central Bank of Sri Lanka has been a strong partner at every step. 

In 2022, the RBI enabled the opening of Special Rupee Vostro Accounts — allowing overseas correspondent banks to hold rupees and settle trade without routing through dollar systems. More recently, in August 2025, the RBI simplified the process for AD banks to open these accounts without requiring prior RBI approval — removing a key operational bottleneck. And then, in October 2025, came a landmark step directly relevant to this roundtable. The RBI amended the Foreign Exchange Management (Borrowing and Lending) Regulations to permit Authorised Dealer banks — both in India and their branches abroad — to extend rupee-denominated loans to residents of Bhutan, Nepal, and Sri Lanka, including banks in these jurisdictions, specifically for cross-border trade transactions.

Let that sink in for a moment. An Indian bank's branch here in Colombo can now lend in Indian rupees to a Sri Lankan importer buying Indian goods. A Sri Lankan bank can borrow in INR to finance trade with India, without touching the dollar at all. This is not incremental reform. It is a structural shift in how regional trade finance can work.

The RBI has been explicit that this is part of a broader strategy to reduce reliance on hard currencies in regional commerce, cut transaction costs, stabilise currency flows, and deepen financial integration across the neighbourhood. For Sri Lanka, it could not have come at a better time.

India today is the one of the world's largest economy, on a clear trajectory to become the third largest within this decade. GDP growth has averaged over 7% for three consecutive years. India's foreign exchange reserves stand at over USD 680 billion, among the largest in the world. Inflation is under control. The current account is manageable. And the rupee, while not a fully freely convertible currency, has shown remarkable relative stability compared to many emerging market currencies in a turbulent global environment.

For Sri Lanka,  an economy still consolidating its recovery and rebuilding reserves, having deeper access to rupee-based financing and settlement is an additional form of stability. Trade financed in INR does not add to Sri Lanka's dollar liabilities. Imports paid in rupees do not drain the foreign exchange reserve. And the strength and predictability of the Indian economy provides a level of confidence in rupee-based instruments that few other regional currencies can offer. In fact, INR denominated Lines of Credit have found acceptance in Sri Lanka for the precise reasons that INR-LKR denominated trade is being promoted. 

We are not suggesting the rupee replace the dollar overnight — that is not the proposition. The proposition is more practical: for trade between India and Sri Lanka, which already runs at more than USD 7 billion annually, there is no reason why a growing proportion of it cannot be settled in our own currencies, on our own terms, through our own banking systems.

But the most important part is the industry feedback and participation to drive this process, as policy frameworks and regulatory changes are necessary conditions. But, they are not sufficient ones.

The reason this roundtable matters is precisely because of the people in this room. Heads of treasury of Sri Lankan banks understand the operational realities of currency settlement better than any policymaker. Exporters and importers know where the friction points are — whether in pricing, hedging, documentation, or correspondent banking relationships. Chambers of commerce see the picture across sectors and across firm sizes. Think tanks bring the analytical rigour. And the media will carry this conversation beyond this room to the broader public.

I want to be direct: we need to hear from you. We need to understand where the current system is working and where it is falling short. Are the Vostro account frameworks being utilised, or are there operational barriers that remain? Is the new INR lending provision going to translate into actual trade finance products, or do we need further regulatory clarity? What pricing benchmarks work for INR-denominated trade instruments? What would make exporters on both sides more comfortable invoicing in rupees?

The answers to these questions will shape the next phase of policy. India's approach to INR’s global acceptance is evolving, and the feedback from practitioners — from this room — is exactly what should inform it. Today's roundtable is not a briefing. It is a genuine dialogue.

Ladies and gentlemen, the title of today's event — Rupee to Rupee — is also, I think, a statement of intent. It says: we are serious about conducting this relationship on our own terms, in our own currencies, through our own institutions. It says: the India-Sri Lanka commercial corridor is mature enough, and important enough, to deserve its own financial infrastructure.

I believe we are at an inflection point. The policy is in place. The intent is there on both sides. What is needed now is the institutional will, the operational design, and the industry confidence to make it work at scale.

I look forward to a rich and candid discussion. The High Commission will be listening carefully,  and will carry what we hear today into our engagement with both the Reserve Bank of India and the relevant authorities here in Sri Lanka. I am also happy to note that the Indian CEO Forum intends to be a penholder of an action plan that will be drawn up based on industry consultations which will guide our combined efforts to strengthen the Rupee to Rupee commercial corridor. 

Thank you! 

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Sinhala PR - Roundtable on “Rupee to Rupee Strengthening the India-Sri Lanka Commercial Corridor” held in Colombo