NEW DELHI: India is preparing to test a major transformation in its currency system after the Centre approved the Reserve Bank of India’s (RBI) proposal to conduct large-scale field trials of 2 billion polymer banknotes 1 billion each in Rs 10 and Rs 20 denominations. If the trials prove successful, the country could gradually introduce durable plastic-substrate currency into regular circulation alongside existing paper notes.
The move, approved under the provisions of the RBI Act, 1934, marks the first significant step towards evaluating whether polymer currency can withstand India’s diverse climatic conditions and reduce the long-term costs of printing and replacing worn-out banknotes.
However, the government has made it clear that paper currency is not being phased out. Instead, polymer notes will coexist with conventional paper banknotes, with no proposal currently under consideration to replace the existing currency system entirely.
Replying to a question during the Monsoon Session of the Lok Sabha, Minister of State for Finance Pankaj Chaudhary said the project remains in its preliminary stage and that a decision on regular circulation would be taken only after successful completion of the field trials.
According to the minister, the RBI has informed the government that international experience shows polymer banknotes have a significantly longer lifespan than conventional paper currency. “The introduction of polymer banknotes is currently in a preliminary phase,” Chaudhary told Parliament, adding that the proposed polymer notes will circulate alongside existing paper notes rather than replacing them.
Before any nationwide launch, the polymer notes will undergo extensive field testing across varying climatic and geographical conditions.
The trials will assess key parameters including durability, resistance to creasing, handling characteristics, wear and tear, environmental resilience, and public acceptance. Officials will examine how the notes perform under India’s extreme heat, humidity, dust, rainfall, and continuous public handling.
The objective is to determine whether polymer notes can better withstand India’s demanding circulation conditions compared to conventional cotton-rag paper currency. Even before the government’s formal approval, the RBI’s printing subsidiary, Bharatiya Reserve Bank Note Mudran Pvt. Ltd. (BRBNMPL), had initiated preparations.
On July 17, BRBNMPL floated a global Expression of Interest inviting manufacturers to supply 68,000 reams of opacified polymer substrate sheets embedded with advanced security features.
These materials will be evaluated for their texture, durability, substrate integration, and compatibility with India’s currency printing systems before large-scale production begins. Although polymer notes are estimated to cost 20–24 per cent more to manufacture initially than traditional paper notes, they offer a significant long-term advantage.
International studies indicate that polymer currency lasts 2.5 to 4 times longer than conventional cotton-based banknotes, substantially reducing the need for frequent reprinting and replacement. The durability could prove particularly beneficial for lower denomination notes such as Rs 10 and Rs 20, which experience the highest circulation and wear.
Officials believe the transition could help reduce India’s annual currency printing expenditure, which has risen to Rs 6,372.8 crore, while also lowering transportation, storage, and disposal costs over the lifetime of the notes.
The government also dismissed concerns that introducing longer-lasting physical currency could slow India’s rapidly expanding digital payments ecosystem. Responding to questions in Parliament, Chaudhary said any impact on digital transactions could only be assessed after regular issuance of polymer notes.
He emphasised that cash and digital payments complement rather than compete with each other, giving citizens multiple payment options depending on their needs.
