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India's Commerce Secretary Sunil Barthwal announced on Sunday that the Indian rupee (IND) may now be used as a trade currency to substitute the use of the US dollar in foreign trade.

The move comes to light amid worldwide trends of de-dollarization and efforts to promote a multi-polar world. 

The new policy was hailed as "dynamic and responsive" and is intended to be used in trade with countries that are facing a shortage of dollars or currency failure in the wake of the Fed's sharpest tightening of monetary policy in decades.

The policy is set to take effect on April 1rst.

"Trade between India and Malaysia can now be settled in Indian Rupee (INR) in addition to the current modes of settlement in other currencies. This follows the decision by the Reserve Bank of India in July 2022 to allow the settlement of international trade in the Indian Rupee (INR)," the Ministry of External Affairs said.

Great news: India, Malaysia can settle trade in the Indian rupee now, says MEA statement; India International Bank of Malaysia (IIBM), Kuala Lumpur operationalises the mechanism by opening Rupee Vostro Account through Union Bank of India. pic.twitter.com/38eIk81HHp

— Mats Nilsson (@mazzenilsson) April 1, 2023

"This initiative by the Reserve Bank of India (RBI) is aimed at facilitating the growth of global trade and to support the interests of the global trading community in Indian rupees," it further said.

Among the main objectives of the trade policy is to "encourage" the internationalization of the rupee, the official noted.

It also aims to increase the Indian exports of goods and services to $2 trillion by 2030, commerce and industry minister Piyush Goyal said.

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Bangladesh is set to kick off trade operations with India using rupees after the Ministry of Commerce submitted a recommendation letter at the last cabinet meeting.

"The use of rupees will start with Bangladesh’s $2 billion trade with India. Bangladesh Bank has almost finished all kinds of trials in this regard. Trading in rupee will be introduced in both countries only after the bilateral decision on some issues," an executive director of Bangladesh Bank said.

India & Bangladesh are considering replacing the US dollar with the rupee and taka as the currency of exchange btw the two nations.#IndiaBangladeshFriendship #BangladeshIndependenceDay pic.twitter.com/KBWE70ZHu8

— Alzebअलजेब العجیب🎯 🍁 🇮🇳 (@AlzebInd786) March 27, 2023

Trade in rupees was also promoted with Russia as a means of securing a global status for India's national currency.

Russia already conducts trade in rupees with India. Mauritius, Iran, and Sri Lanka have also been using the rupee in their trade transactions. 

Trends of de-dollarization have been accelerating ever since the West waged a strategic provocation that compromised Russia's national security, forcing it to launch a special military operation in Ukraine. 

In a bid to overturn sanctions against Russia, countries have started to opt for alternative means of conducting transactions. This facilitated the break of US financial hegemony over international trade. 

The BRICS have recently agreed to create their own currency. However, details have not been disclosed yet as members are expected to participate and share their ideas on the matter in a forthcoming session of the BRICS summit in August 2017.

Read more: China, Brazil announce de-dollarization of mutual trade