Key conclusions

• India’s e-rupee has evolved from a national experiment in digital payments into a strategic instrument aimed at influencing cross-border trade, remittances and tourism flows.

• E-rupee represents sovereign digital money, enabling direct and final settlement without the need for multiple intermediaries for international payments.

• India sees the cross-border employ of CBDCs as a way to address long-standing shortcomings in global payments, including high costs and long settlement times.

• Proposals to link e-rupees to other countries’ CBDCs reflect India’s efforts to simplify trade and tourism settlements using sovereign digital currencies.

India’s e-rupee is no longer just a technology experiment; has become an significant part of the country’s financial plans. With emerging proposals to take e-rupee beyond India’s borders, e-rupee is now positioned as a key tool to enhance international trade, remittances and tourism. This is also increasingly being talked about in the context of India’s geopolitical strategy.

This article discusses what e-rupee is and how India plans to employ it to address cross-border challenges. It examines the strategic goals behind this shift, how such deals could function and what might be involved in successful implementation.

What is e-rupee?

E-rupee is the Central Bank of India’s digital currency (CBDC), a digital form of the Indian rupee issued by the Reserve Bank of India (RBI) on par with physical cash. It works like digital cash stored in a wallet and the RBI is the guarantor of its value. The RBI is currently running pilot programs for both retail (public employ) and wholesale (institutional employ) versions to test the technology, distribution and practical applications.

Unlike India’s Unified Payments Interface (UPI), which facilitates real-time transfers between bank accounts, the e-rupee itself represents sovereign digital money. This allows for direct, immediate and final settlement without the need to employ multiple intermediaries.

Did you know? The idea of ​​cross-border CBDCs gained momentum as central banks realized that even instant domestic payments could require several days to settle internationally due to legacy layers of correspondent banking.

Cross-border challenges India intends to address

Today’s international payments depend heavily on correspondent banking networks and systems pegged to the US dollar. They often involve delays, high costs, constrained transparency and dependence on intermediary banks. These types of inefficiencies affect businesses, remittance senders and travelers.

India sees e-rupee as a potential solution to create a digital, interoperable infrastructure for cross-border settlements.

Recent policy discussions have increasingly focused on international applications beyond domestic employ. The RBI has proposed linking e-rupees to CBDCs of other countries, especially BRICS countries, to facilitate cross-border trade and tourism transactions.

Four strategic drivers behind India’s global e-rupee launch

A combination of economic, financial and strategic priorities is driving India’s interest in taking e-rupees beyond national borders. These goals reflect how Modern Delhi wants to modernize cross-border payments while strengthening the rupee’s role in global transactions.

• Reducing costs and improving the speed of remittances and payments: India is one of the largest in the world peak recipients of remittances, and many Indians travel or work abroad. Established cross-border transfers involve multiple banks and currency conversions, which add time and costs. A direct e-rupee corridor or interoperability with other CBDCs could reduce the number of intermediaries, enabling faster and cheaper transfers, benefiting migrant workers, families and miniature businesses.

• Simplifying trade and tourism settlements: CBDC linking proposals between BRICS countries aim to facilitate trade and tourism payments by enabling direct settlement in sovereign digital currencies. This would reduce the need for dollar currency conversions or sophisticated intermediary processes, which is particularly significant given growing trade volumes within BRICS.

• Promoting rupee internationalization: India has long sought to raise the employ of the rupee in global trade and financial flows without calling the effort de-dollarization. Linking the e-rupee to other CBDCs could raise its effectiveness and attractiveness internationally, especially in Asia and among BRICS partners.

• Providing a regulated alternative to private stablecoins: While U.S. dollar-pegged stablecoins and other private digital assets are enjoying wider popularity around the world, the RBI has warned that they carry monetary and systemic risks due to constrained oversight and lack of state support. A CBDC-based cross-border system provides a regulated alternative that reduces the risk of financial fragmentation.

Did you know? In early global CBDC pilots, banks reported that real-time cross-border settlement reduced the need for vast prepaid nostro accounts, freeing up unused capital for lending or liquidity management purposes.

How cross-border e-rupee transactions could work

Experts and policymakers have outlined several practical approaches to enable seamless cross-border employ of e-rupees:

• Bilateral CBDC corridors: The central banks of both countries have direct e-rupee settlement agreements, including currency conversion mechanisms and aligned regulatory standards.

• Multi-sided platforms: A common technical infrastructure connects CBDCs from many countries, following initiatives such as: Multi-CBDC bridgeto promote wider interoperability.

• Linking national payment systems with CBDC settlements: India has been successful in connecting UPI to select overseas payment networks. This approach integrates interoperable payment rails, with e-rupee serving as the primary settlement asset.

Barriers to global CBDC interoperability

The cross-border integration of CBDCs remains sophisticated. Countries need to harmonize technology standards, governance frameworks, compliance requirements, including anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations, as well as dispute resolution mechanisms. An ongoing challenge is managing settlement imbalances, where one country accumulates an excess of another country’s digital currency holdings without corresponding outflows.

Geopolitical factors also play a role, as such initiatives may trigger a backlash from dominant currency issuers or key trading partners. Leading these efforts requires careful consideration of broader strategic dynamics.

Did you know? Several countries exploring CBDC connections see tourism as a surprisingly forceful employ case because visitors can pay digitally in sovereign money without opening local bank accounts or exchanging cash.

Key results and milestones for the global e-rupee

For India, taking e-rupees beyond its borders would mean delivering material results. These include lower transaction costs and faster settlement times for cross-border payments, wider international employ of rupees in trade and tourism, and successful pilot programs that enable banks and fintech companies to conduct cross-border transactions using e-rupees.

Key milestones could include launching pilot corridors with strategic partners, strengthening the regulatory framework and ensuring wider participation of financial institutions.

Positioning India in the future of money

India’s efforts to expand e-rupee internationally reflect a broader strategic vision. The policy aims to modernize cross-border payments, protect the resilience of the financial system and expand the global reach of the rupee in a digital, regulated environment.

Whether achieved through bilateral linkages, multilateral platforms or improved interoperability systems, e-rupee has the potential to change the structure of international money flows over time. However, realizing this potential will require policymakers to effectively address underlying technical, regulatory and geopolitical complexities.