In an exciting development, India has joined hands with the United Arab Emirates (UAE) to revolutionize their trade dynamics. This game-changing agreement, inked during Indian Prime Minister Narendra Modi’s recent visit to the UAE, allows both nations to settle their trade transactions using the Indian rupee rather than relying on the dominant US dollar. This bold move not only saves India substantial conversion costs but also marks a significant step towards strengthening economic ties between the two countries.
Date: July 16, 2023
Place: New Delhi, India
The partnership doesn’t stop there. Alongside the currency shift, India and the UAE have also agreed to establish a cutting-edge real-time payment link. This innovative link streamlines cross-border money transfers, making them faster, easier, and more efficient. The Reserve Bank of India has hailed these groundbreaking agreements as instrumental in facilitating seamless transactions and payments, while simultaneously fostering deeper economic cooperation.
India, a major player in global oil import and consumption, has traditionally settled its payments for UAE oil in US dollars. However, with the recent framework put forth by the Indian central bank to settle global trade in rupees, the tables are turning. India is now poised to make its first payment for UAE oil in its national currency, potentially paving the way for future oil transactions in rupees.
With bilateral trade between India and the UAE reaching an impressive $84.5 billion from April 2022 to March 2023, this partnership holds immense promise for both nations. Furthermore, an inside source revealed that India’s first rupee payment for UAE oil could be made to Abu Dhabi National Oil Co (ADNOC), fueling even more anticipation for this groundbreaking collaboration.
Adding to the excitement, the Reserve Bank of India has announced that the central banks of both countries have agreed to integrate India’s Unified Payments Interface (UPI) with the UAE’s Instant Payment Platform (IPP). This strategic move, already gaining popularity in Asia, is expected to significantly reduce payment costs, making transactions even more cost-effective.
The stage was set for this historic agreement when Prime Minister Modi touched down in Abu Dhabi for his one-day visit. During his time there, he had the honor of meeting with President Sheikh Mohamed bin Zayed Al Nahyan, solidifying the strong bonds between India and the UAE.
With this visionary collaboration, India and the UAE are boldly stepping into a future where trade is more seamless, efficient, and economically fruitful. The world watches with anticipation as these two nations lead the way in reshaping global trade dynamics.
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