India has approved field trials of polymer currency notes in the ₹10 and ₹20 denominations, with the government clarifying that the initiative is intended to test the new banknotes and does not signal the replacement of existing paper currency.
The Finance Ministry informed Parliament on Monday that the government has accepted a proposal from the Reserve Bank of India (RBI) to conduct field trials of polymer banknotes. Minister of State for Finance Pankaj Chaudhary confirmed the decision in a written reply in the Lok Sabha.
The RBI plans to issue one billion ₹10 polymer notes and one billion ₹20 polymer notes during the trial phase. The field exercise will evaluate how the notes perform under Indian conditions before any decision is taken on wider circulation.
The government said there is currently no proposal to phase out paper banknotes. Instead, polymer notes are expected to circulate alongside existing paper currency if the trials prove successful.
According to the RBI, polymer banknotes offer several advantages over conventional paper notes. They are more durable and typically remain in circulation longer, particularly in economies where cash transactions remain common.
Lower-denomination notes such as ₹10 and ₹20 generally wear out more quickly and require frequent replacement. The central bank said polymer substrates could reduce long-term printing and replacement costs while generating less waste.
The RBI also noted that polymer banknotes can incorporate enhanced security features, including transparent see-through windows and specialised security threads, making them more resistant to counterfeiting.
Responding to a separate query, the government said it is too early to determine whether polymer banknotes will influence the adoption of digital payments. The RBI said any assessment can only be made after the notes enter regular circulation and sufficient data becomes available.
The central bank maintained that physical currency and digital payment systems are complementary and are expected to continue coexisting.
“There is no proposal under consideration to replace paper substrate-based banknotes with polymer substrate-based banknotes,” Chaudhary said in his written reply in the Lok Sabha.
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