The Indian government has authorised the Reserve Bank of India (RBI) to print an initial batch of 2 billion polymer banknotes for field trials, the government informed Parliament on Monday, according to a report by Business Today (via Times of India). The RBI has recently floated a tender to procure material for polymer banknotes, reviving a proposal that has been under consideration for nearly two decades.
Government Approves Pilot for Polymer Banknotes
Minister of State for Finance Pankaj Chaudhary told the Lok Sabha that the RBI will print one billion Rs 10 notes and one billion Rs 20 notes. These denominations are often in short supply, the minister said. He also clarified that there is no proposal to replace paper currency entirely with polymer banknotes, and that both types of currency will continue to circulate together.
If implemented, the move would mark the first use of polymer banknotes in India, where currency has been printed on specialised paper for almost a century.
Denominations and Circulation Plan
The new notes will first be used for field trials before being introduced into regular circulation. According to Chaudhary, the plan was approved alongside an expansion of the country's currency printing infrastructure, which had been facing capacity limitations.
| Metric | Value |
|---|---|
| Total polymer notes authorised | 2 billion |
| Rs 10 notes | 1 billion |
| Rs 20 notes | 1 billion |
| Share of total banknotes in circulation (Rs 10 & Rs 20 combined) | ~25% by number, 1.4% by value (end of last financial year) |
Advantages of Polymer and Global Context
Polymer notes, produced using durable plastic film instead of paper, generally have a longer lifespan and require replacement less frequently because they are more resistant to wear and tear. Polymer banknotes are printed on a non-fibrous, non-porous plastic substrate. Chaudhary told Parliament: “RBI has informed that as per international studies, the life span of polymer banknotes is significantly higher than that of paper banknotes. The introduction of polymer banknotes is currently in a preliminary phase.”
Despite being among the world's five largest economies, India is still assessing the introduction of polymer currency, almost three decades after Australia rolled out a full series of plastic banknotes. Today, polymer notes are used in some form by around 60 countries, including the United Kingdom and Canada.
Financial Implications: Printing Costs and Currency in Circulation
The initiative comes at a time when the RBI's spending on printing currency has fallen. According to the central bank's annual report, note printing expenditure declined by nearly one-fourth to Rs 4,875 crore in 2025-26 compared with the previous year, primarily because fewer banknotes were printed. This reduction came even as the total value of currency in circulation increased 12% to Rs 41.23 lakh crore at the end of March 2026, up from Rs 36.86 lakh crore a year earlier, reflecting continued demand for cash.
In recent years, the RBI has also encouraged greater use of Rs 10 and Rs 20 coins. According to central bank data, these two denominations together accounted for nearly one-fourth of the total number of banknotes in circulation at the end of the last financial year, although their combined share by value stood at just 1.4%.
Timeline and Next Steps
Officials have indicated that the rollout could take several months, as both the government and the RBI want to ensure that security standards are fully met and that the material used has no connection with supplies made to countries such as China and Pakistan. The government's latest decision revives a proposal first announced in 2012. A Press Information Bureau (PIB) release dated December 13, 2012 stated that the RBI, in consultation with the Centre, had examined several alternatives, including the use of polymer substrate for printing banknotes. At the time, it was decided to introduce one billion Rs 10 polymer notes on a pilot basis across five cities.
For executives and investors, the polymer note pilot signals a shift in currency management strategy that could reduce long-term printing costs and improve durability, while maintaining paper money in parallel. The RBI's falling note printing expenditure and rising cash circulation underscore continued reliance on physical currency despite digital payment growth. The field trial results and subsequent rollout timeline will be critical milestones to watch.
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