India and UAE Strengthen Economic Ties with Rupee-Based Commerce Deal

• The deal aims to reduce transaction costs and avoid currency conversions.
• Bilateral trade between India and UAE reached $84.5 billion in the last fiscal year.
• India may make its first rupee payment for UAE oil to ADNOC.

India has inked a deal with the UAE to settle commerce in rupees rather than dollars, supporting India’s attempts to reduce transaction costs by avoiding dollar conversions.

On Saturday, India’s Prime Minister Narendra Modi visited the UAE, and the two countries agreed to establish a real-time financial link to promote quicker cross-border money transfers.

According to a statement issued by the Reserve Bank of India on Saturday, the two agreements will enable “seamless cross-border transactions and payments, as well as foster greater economic cooperation.”

the nation of India, the world’s third largest oil importer and user, now pays for UAE oil in dollars, despite the fact that its central bank established last year a framework for settling worldwide trade in rupees.

In the fiscal year from April 2022 to March 2023, bilateral commerce between the two countries was $84.5 billion.

According to Reuters, an official familiar with the terms of the arrangement said India might make its first rupee payment for UAE oil to Abu Dhabi National Oil Co (ADNOC) on Friday.

According to the Reserve Bank of India, the two central banks agreed to connect India’s Unified Payments Interface (UPI) and the UAE’s Instant Payment Platform (IPP).

Such arrangements, which are becoming more common in Asia, often lower the cost of payments.

Modi arrived in Abu Dhabi earlier on Saturday for a one-day visit and met with President Sheikh Mohamed bin Zayed Al Nahyan.

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