NEW DELHI (Reuters) – India and the United Arab Emirates (UAE) have signed an agreement to use the rupee for trade transactions, reducing costs by avoiding dollar conversions. During Indian Prime Minister Narendra Modi’s visit to the UAE, the countries also agreed to establish a real-time payment system for cross-border transfers.
The Reserve Bank of India stated that these agreements will facilitate smooth cross-border transactions and payments, promoting economic cooperation between the two nations.
India, the world’s third-largest oil importer and consumer, currently pays for UAE oil in dollars. Last year, the Indian central bank introduced a framework to settle global trade in rupees.
Bilateral trade between India and the UAE amounted to $84.5 billion from April 2022 to March 2023.
According to an official familiar with the agreement, India may soon make its first rupee payment for UAE oil to Abu Dhabi National Oil Co (ADNOC), as reported by Reuters.
The Reserve Bank of India and the UAE central bank have agreed to connect India’s Unified Payments Interface (UPI) with the UAE’s Instant Payment Platform (IPP).
Such arrangements, increasingly common in Asia, generally reduce payment costs.
Modi arrived in Abu Dhabi for a one-day visit and held a meeting with President Sheikh Mohamed bin Zayed Al Nahyan.
(Reporting by Arpan Chaturvedi; editing by Clelia Oziel)
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