India is about to test whether its smallest currency notes can be made to last longer. The government has approved an RBI trial of 100 crore polymer notes of ₹10 and ₹20 denominations each. The idea is not to replace cotton notes, which India uses, but to put the two side by side and see how polymer performs in the conditions in which Indian currency actually circulates.
This is not India’s first attempt. In 2012, India announced a field trial of the same number of polymer ₹10 notes in five cities—Jaipur, Shimla, Bhubaneswar, Mysore and Kochi—chosen for their climatic diversity. The process reached the tendering stage in 2017, but was eventually shelved over technological and procurement difficulties.
The question has returned in 2026, but the circumstances have changed. India now has a far bigger digital payment network, even though the overall demand for currency remains strong. That makes the ₹10 and ₹20 notes a useful test—these low-value notes are handled most, but their use may also be changing as digital payments grow.
So the experiment is not simply about whether plastic is better than cotton. A polymer note could cost more to produce but last several times longer. It would also bring new costs for machines, sorting, handling and disposal. The real test is whether the longer life of the note can justify those costs under Indian conditions.
Timeline of banknote
1770: Bank of Hindostan, owned and operated by a British managing agency, becomes one of the earliest institutions in India to issue paper banknotes
1861: The Paper Currency Act gives the colonial Government of India the monopoly over note issuance
1935: The newly established Reserve Bank of India takes over responsibility for issuing banknotes
1949: Independent India’s first banknote—the ₹1 note—replaces the British king’s portrait with the lion capital of Ashoka
1996: The Mahatma Gandhi series begins
2012: India announces a field trial of 100 crore polymer ₹10 notes in five cities—Jaipur, Shimla, Bhubaneswar, Mysore and Kochi—chosen for climatic diversity
2017: Procurement for the 2012 trial reaches the tendering stage but is eventually shelved over technological and procurement difficulties
2026: The government approves a fresh RBI trial of 100 crore polymer notes of ₹10 and ₹20 denominations each
Q&A
Does a costlier note need replacing less often?
The basic question comes down to two things: how much a note costs and how long it lasts. The calculation is not straightforward as the RBI does not publish the cost of polymer notes for each denomination.
The most-cited figure is from 2012. A ₹10 cotton note then reportedly cost 96 paise and lasted 9-10 months. This figure is more than a decade old and should not be treated as today’s cost.
The RBI’s total security-printing expenditure was ₹6,372.8 crore in 2024-25 and ₹4,875.2 crore in 2025-26, down 23.5%. This reflects lower print orders, not necessarily a cheaper note, because the RBI prints notes both to meet demand and to replace notes that are no longer fit for use.
The case for polymer is not that it is cheaper to print. It may cost more per note, but it needs to be produced less often. The trial will show whether that makes economic sense.
What would the new notes cost?
There is no reliable answer yet. The RBI has not disclosed a target cost. A global tender for polymer substrate with security features closed on August 18, with testing to follow under Indian conditions. Finance Minister Nirmala Sitharaman told Parliament that neither a launch date nor likely expenditure had been fixed.
Comparing 2012’s 96-paise note with an assumed cost for polymer ones would be misleading. What matters is the full life-cycle cost—production, security, processing, handling, replacement and disposal.
How much longer would a polymer note last?
Evidence points to a substantial gain, but there is no single figure.
Governor Sanjay Malhotra says polymer notes elsewhere typically last three to four times as long, because low-denomination notes have higher “velocity” and shorter lives.
The Bank of Canada, when it switched in 2011, conservatively assumed 2.5 times. Australia’s $10 polymer note lasts 3.8 times as long as paper. New Zealand’s $20 polymer note lasts 4.9 times as long. Mexico’s 20-peso polymer note lasts 3.5 times as long. Papua New Guinea’s 2-kina polymer note lasts 4.8 times as long. (These figures are compiled by CCL Secure, a commercial polymer-substrate maker, from figures reported by each central bank.)
The figures show that note life depends on climate, handling and each bank’s own standard for deciding when a note is no longer fit for use. If India’s old 9-10-month benchmark holds, a 3-4-times gain would mean roughly a little over two or three years.
What lesson can India learn from other countries’ experience?
Australia issued the world’s first modern polymer note in 1988 and switched entirely to polymer by 1996. Its $10 note reportedly lasts 3.8 times as long as its paper predecessor. The material also allows security features such as transparent windows that are harder to build into paper.
Bank of England has directly costed the switch. It had printed 595 million polymer £5 notes at a cost of £46 million and expected around 1,262 million £10 notes to cost about £99 million by October 2017. The £5 and £10 polymer notes were expected to last at least five years and the £20 potentially over 20 years. This reflects how differently each denomination is actually used.
Canada’s own life-cycle assessment found polymer’s environmental impact at least 30% smaller than paper’s in every category measured. The main reason was that greater durability reduces the need for transporting fresh notes around the country.
These examples cannot automatically be applied to India. Indian notes pass through a different mix of banking channels, cash-intensive retail businesses and informal transactions—all under different regional climates.
Why are ₹10 and ₹20 notes being tested?
Low-value notes are handled the most. But India is now a far bigger UPI economy. RBI research finds UPI growth has coincided with a declining share of low-denomination notes even as overall currency demand stays strong—a “currency demand paradox”.
Running polymer alongside cotton allows a direct comparison between digital payment’s growth and the demand for ₹10 and ₹20 notes.
What is the cost of machines and other infrastructure?
Currency moves through ATMs, cash recyclers, sorting machines and currency chests that RBI rules already require banks to use. Polymer’s thickness and flexibility differ from cotton’s. This affects how machines feed, count and sort notes. The trial must, therefore, show that the infrastructure can process polymer notes without costly recalibration.
Does the environmental question end when the note is destroyed?
Indian banknotes are cotton-based. Polymer notes use a plastic substrate instead. The RBI destroys worn-out notes of either kind as part of its ordinary currency-management process. The full environmental calculation, therefore, has to cover production, transport, circulation and disposal—not printing alone.
An RBI-commissioned assessment by The Energy and Resources Institute, prepared for India’s earlier polymer proposal, found such notes more environment-friendly than cotton ones under the assumptions it used.
The government clarified at the time that the debate should not be framed simply as a question of saving trees, since Indian notes are made from cotton comber and linter— short-fiber byproducts of cotton processing—not wood pulp.
That older assessment cannot automatically settle today’s question, given the different scale of the 2026 trial, newer substrate technology and a far larger digital-payments ecosystem now surrounding physical cash.
What are India-specific tests planned?
The RBI has said the field trial will examine how polymer notes perform specifically under Indian climatic and usage conditions. These include extreme summer heat, high humidity in some regions, monsoon exposure and highly varied cash-handling practices.
The trial is designed to test how this particular substrate performs under the conditions in which Indian notes actually circulate.
Is the real experiment plastic versus cotton?
The polymer trial is the latest step to deal with an older problem, not a separate one. The immediate cost of producing a polymer note will become clear once procurement concludes. The harder number is the cost per year of useful circulation. This has to account for price, lifespan, replacement requirements, sorting and handling costs, machine compatibility, transportation, disposal and the changing demand for physical cash at the bottom of the denomination structure.
Suppose a polymer note costs substantially more to produce but lasts three or four times as long. It could still be considerably cheaper over its useful life. If it lasts only marginally longer than cotton, the premium may not be justified.
If it also creates significant machine, sorting or recycling costs, part of the apparent saving could disappear entirely.
The 2012 figure of 96 paise and nine-to-ten-month life offers a historical benchmark. International experience offers a plausible range for polymer durability. But neither gives India the number it actually needs.
That number can come only from the trial itself—and until the RBI publishes it, claims that polymer currency will definitely save money remain an expectation rather than a demonstrated result.
If all goes well, when will the polymer notes hit the street?
RBI is targeting April 2027, or the start of the next financial year, for wider circulation if the trial succeeds.