RTSM · India's Rupee Trade Settlement Framework for Future Adoption
2×2 Scenario Framework · US Trade Pressure × Rupee Absorbability
Updated March 2026
Citation: Anisree Suresh, "Beyond Dollar", Takshashila Discussion Document 2026-08, Version 1.0, March 2026, The Takshashila Institution. [Read the paper →]
Disclaimer: This webpage has been created to visualise the framework recommended in the above-mentioned paper. It is not a live tracker — data is not updated automatically. All figures are sourced from official publications and were last accessed as follows: · India bilateral trade data — Ministry of Commerce & Industry (DGCIS/Tradestat), last accessed March 2026 · FY 2023-24 figures used throughout unless otherwise noted
· India–Russia trade — Indian Embassy Moscow / IBEF, FY 2024-25 data (most recent available), last accessed March 2026
· US tariff rates — USTR Liberation Day schedules and Section 122 replacement rates, last accessed March 2026
· Sanctions data — US Treasury OFAC SDN list, last accessed March 2026
· E_US index weights — indicative/illustrative; calibration pending empirical validation against BIS/IMF data
S1 — High US pressure, High absorbability (Opportunity) S2 — Low US pressure, High absorbability (Feasible, low motive) S3 — High US pressure, Low absorbability (Rupee trap) S4 — Low US pressure, Low absorbability (Minimal case)
X-axis: US trade exposure — left = High US pressure (tariffs/sanctions), right = Low US pressure. Y-axis: Bilateral trade balance — top = Favourable (India surplus, rupees can circulate), bottom = Unfavourable (India deficit, rupee accumulation risk). Dot size = bilateral trade volume. Hover for country detail.
CountryScenarioE_US (US pressure)Absorbability India surplusUS tariffRTSM constraint

Axis 1 — E_US composite index (US trade pressure)

E_US,i = w1·T_i + w2·S_US,i + w3·F_i + w4·RT_i + w5·(1 − USD_inv,i)
T_iShare of exports under Section 301/232 tariffs (USTR data)
S_US,iBilateral US trade / GDP_i — degree of US economic reliance
F_iOFAC sanctions flag — binary 0/1 (Russia=1, Iran=1)
RT_i ★Trump reciprocal tariff rate (normalised 0–1). Highest-weight variable. Includes Liberation Day rates, Russia-oil penalties, Sec.122 post-IEEPA.
USD_inv,iInverted USD invoicing share. Lower USD use = higher rupee incentive.
Weights: w1=0.20 · w2=0.15 · w3=0.25 · w4=0.30 · w5=0.10

Axis 2 — Absorbability index A_i (rupee usability)

A_i = f(B_i, C_i, R_i, RA_i)
B_i = (X_IN,i − M_IN,i) / ((X_IN,i + M_IN,i)/2)
B_iNormalised trade balance. Positive = India surplus = partner accumulates rupees they can spend back on Indian goods. This is the primary absorbability signal.
C_iCorrespondent banking links (Vostro/Nostro count, BIS/SWIFT data). Infrastructure readiness for rupee settlement.
R_iExisting rupee balances held by partner (RBI SRVA reports). Current rupee liquidity stock.
RA_iRupee asset availability: Masala bonds, INR trade credit access. Determines if surplus rupees have investable outlets.
Threshold: A_i > 0.1 = High absorbability (S1/S2). A_i < −0.1 = Low absorbability (S3/S4 — rupee trap risk).

Key tariff events · April 2025 – March 2026

Apr 2, 2025Liberation Day. 10% universal baseline + country-specific reciprocals under IEEPA. India 26%, Bangladesh 35%, Sri Lanka 44%, Cambodia 49%, Vietnam 19%.
Apr 9, 202590-day pause for all except China (raised to 145%). India held at 26% reciprocal during pause.
Jul–Aug 2025Rates finalised at pause-end. India 25%. Additional 25% punitive on India for Russian oil purchases → total effective 50%. E_US for India surges sharply.
Nov 2025US–China 90-day trade deal. Rate reduced from 145% → ~30%.
Feb 2026Supreme Court strikes down IEEPA. Section 122 (Trade Expansion Act) 10–15% baseline replaces it. US–India deal: reciprocal → 18%, Russia-oil penalty lifted.
Mar 12, 2026USTR Section 301 forced-labour probe opened on 60+ countries — India, Bangladesh, Sri Lanka, UAE, Saudi Arabia all included. New latent tariff risk vector.