UAE and India agree to settle trade in local currencies

Reuters

The central banks of the UAE and India have signed a framework to promote using the rupee and dirham for cross-border transactions.

The agreement was signed during a visit by Narendra Modi, India’s prime minister, to the Gulf state on Saturday.

The two countries also decided to set up a real-time payment link to facilitate easier cross-border money transfers.

The agreements will enable seamless cross-border transactions and payments and foster greater economic cooperation, the Reserve Bank of India said in a statement.

The two central banks also agreed to link India’s unified payments interface (UPI) and the UAE’s instant payment platform (IPP), which will lower the cost of payments.

India in February last year became the first country with which the UAE signed a comprehensive economic partnership agreement (Cepa).

Bilateral trade has increased by approximately 15 percent since the Cepa came into force on May 1, 2022. Trade between the two countries was $84.5 billion from April 2022 to March 2023, according to a joint statement issued by the two countries.

A local media report said India and the GCC had resumed talks to finalise a free trade agreement.

Ausaf Sayeed, secretary at India’s external affairs ministry, told the sixth India-Arab Partnership Conference in New Delhi that the parties have exchanged preliminary documents and delegations have been meeting.