India and UAE Initiate Local Currency Trade Settlements

16 Aug 2023 , 01:45 PM

India and the United Arab Emirates (UAE) have initiated the practice of settling bilateral trade using their respective local currencies, marking a significant development in their economic relations. Indian Oil Corp, the country’s top refiner, recently completed a transaction wherein it made payments in rupees for the purchase of a million barrels of oil from the UAE’s Abu Dhabi National Oil Company (ADNOC).

This payment in rupees for oil signifies a practical implementation of the new approach in bilateral trade, as confirmed by a statement from the Indian embassy in the UAE.

The agreement between India and the UAE, signed in July, allows trade settlements to occur in rupees rather than dollars. This move aims to reduce transaction costs by eliminating the need for dollar conversions.

During Indian Prime Minister Narendra Modi’s visit to the UAE, both nations also agreed to establish a real-time payment link, facilitating smoother cross-border money transfers. India’s proactive approach extends to seeking similar local currency arrangements with other nations. This strategy aims to bolster exports, particularly amid the backdrop of slowing global trade.

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