Been an advocate for this. Sri Lanka saves on transaction costs and preserves USD while expanding exports to India and India will get an edge over other countries for trading with SL for import and exports. India - SriLanka has easy potential for 5X current trade, with improved regulatory framework.
Sri Lanka and India are exploring the possibility of settling their approximately US$6 billion bilateral trade in Indian Rupees, with both countries examining the potential economic and operational advantages of such an arrangement.
To advance the discussion, a high-level roundtable titled “Rupee to Rupee: Strengthening the India–Sri Lanka Commercial Corridor” was held in Colombo yesterday, bringing together key stakeholders from the banking, trade, and policy sectors. The forum focused on the benefits, challenges, and practical pathways for expanding local currency settlement between the two countries.
Under the evolving framework, Indian bank branches operating in Colombo can extend Indian Rupee-denominated financing to Sri Lankan importers purchasing goods from India. Similarly, Sri Lankan banks can access INR funding facilities, potentially reducing foreign exchange risks, easing pressure on hard currency reserves, and facilitating smoother cross-border trade transactions.