The rupee had collapsed a year ago when the Fed first warned that it would scale back its programme of so-called quantitative easing, as a reversal of dollar flows exposed the country's gaping external deficits.
India urged the Group of 20 nations on Thursday to consider creating currency swap lines to mitigate the impact on emerging economies of the expected withdrawal of the US Federal Reserve's vast monetary stimulus.
Describing the uncertainty and volatility in the external environment as "worrisome", Finance Secretary Arvind Mayaram said the G20 should seek collaborative solutions with guidance from the International Monetary Fund (IMF).
The Fed indicated on Wednesday that its programme of monthly bond purchases to keep long-term borrowing costs low was on course to end next month.
"In order to ensure the growth outcomes are still achieved, are there solutions that the G20 can explore? Are swap lines a solution?" Mayaram asked at a meeting of G20 deputy finance ministers in Australia.
"Let us get the IMF to analyse whether it is so," he added, according to an official transcript of his remarks.
By setting up swap lines, central banks will effectively backstop each other in the event of a run on a country's currency.
The rupee collapsed a year ago when the Fed first warned that it would scale back its programme of so-called quantitative easing, as a reversal of dollar flows exposed the country's gaping external deficits. Mayaram said he was confident India's growth would rebound to over seven per cent in two to three years.
The finance secretary said: "From 4.7 per cent growth in the last financial year, the Indian economy grew 5.7 per cent in first quarter of 2014-15."
He also said, business confidence is back and though still tentative, growth in industrial sector, specially manufacturing, is showing an uptick.
"We are confident that by pursuing growth inducing policies, the government will contribute fully to going back to +7 per cent growth within two to three years."
Policies pursued by emerging market economies to bring growth back have been effective and India stands committed to the incremental two per cent growth in the global GDP.
The balance of payments crunch was a first test for Reserve Bank of India Governor Raghuram Rajan, who has since called for rich nations to take greater account of the "spillover" effects of their monetary policies on emerging markets.
The pleas by Rajan, a former IMF chief economist, reflected growing concern among large emerging markets that the world's financial architecture operates for the benefit of rich Western countries.
In response the BRICS - Brazil, Russia, India, China and South Africa - have taken steps to strengthen cooperation such as setting up a joint development bank