India and the United Arab Emirates (UAE) have announced that they are settling their bilateral trade in their local currencies. This move comes as part of India’s efforts to reduce transaction costs by eliminating the need for dollar conversions.
Indian Oil Corp, India’s top refiner, made a payment in rupees to Abu Dhabi National Oil Company (ADNOC) for the purchase of a million barrels of oil. The transaction was confirmed by the Indian embassy in the UAE.
This development follows a recent transaction involving the sale of 25 kg of gold from a UAE gold exporter to a buyer in India, which was also settled in Indian rupees.
In July, India signed an agreement with the UAE, allowing them to settle their trade in rupees instead of dollars. This move aims to boost India’s exports by eliminating the complications and costs associated with currency conversions.
During Indian Prime Minister Narendra Modi’s visit to the UAE, the two countries agreed to establish a real-time payment link to facilitate smoother cross-border money transfers.
The bilateral trade between India and the UAE was valued at $84.5 billion in the fiscal year 2022/23. India is actively seeking similar local currency arrangements with other countries to further enhance its export capabilities in light of slowing global trade.
India’s efforts to settle trade in local currencies with the UAE not only streamline transactions but also signify a strengthening economic relationship between the two nations.
