India and the United Arab Emirates have reached an agreement that will allow for rupee settlement of trade, supporting India’s attempts to reduce transaction costs by doing away with dollar conversions.
India ties with UAE to trade in rupees: In order to make cross-border money transfers simpler, the UAE and India also decided to establish a real-time payment link during the visit of Indian Prime Minister Narendra Modi to the UAE on Saturday.
The Reserve Bank of India said in a statement on Saturday that the two agreements would “enable seamless cross-border transactions and payments, and foster greater economic cooperation.”
India, the third-largest importer and user of oil in the world, currently pays for UAE oil in dollars despite its central bank’s announcement last year of a framework for conducting international trade in rupees.
In the year from April 2022 to March 2023, there was $84.5 billion in bilateral trade between the two nations.
Reuters reported on Friday that an official with knowledge of the agreement’s specifics said India might send its first rupee payment for UAE oil to Abu Dhabi National Oil Co (ADNOC).
According to the Reserve Bank of India, the two central banks have agreed to connect the UAE’s Instant Payment Platform (IPP) and India’s Unified Payments Interface (UPI).
However, These agreements, which are becoming more common in Asia, often reduce payment costs.
Modi met President Sheikh Mohamed bin Zayed Al Nahyan after arriving in Abu Dhabi earlier on Saturday for a day-long visit.