India and UAE to expand rupee-dirham trade

X/Piyush Goyal

India and the UAE are actively exploring opportunities to expand the rupee-dirham trade, resulting in an expected five percent saving on all bilateral trade, India’s commerce and industry minister Piyush Goyal said.

The two countries are also working to lower the remittances cost from the UAE to India, the state-owned Press Trust of India news agency reported, citing Goyal.

The minister disclosed that the central banks of India and the UAE have agreed to work with industry and bankers to accelerate and operationalise rupee-dirham trade “much faster, much bigger”.

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Goyal was in the UAE to attend the 11th India-UAE high-level task force on Investments.

Discussions also included creating food and industrial parks in India, the report said.

India and the UAE implemented a free trade agreement in May 2022, with bilateral trade increasing to $84.9 billion in 2022/23 from $72.9 billion in 2021/22.

In February 2022, India became the first country with which the UAE signed a comprehensive economic partnership agreement (Cepa).

Goyal said that the countries have initiated the review progress on the free trade agreement.

“But we have a task force that is assessing the successes and the potential for the future,” he stared, indicating “some big announcements soon”.

The UAE was the seventh largest investor in India in 2021-22, with $1.03 billion of FDI, according to data from the government’s industry promotion and internal trade department.

The UAE’s investments in India include the services, sea transport, power and construction sectors. Between April 2000 and March 2023, the UAE accounted for approximately 2.5 percent of India’s total FDI, amounting to $15.6 billion.

Singapore is the biggest investor in India, putting $17.2 billion in the country over 2022-23, followed by Mauritius ($6.1 billion) and the US ($6 billion).

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

The two nations concluded the first-ever crude oil transaction through local currencies between Abu Dhabi National Oil Company (Adnoc) and Indian Oil Corporation last month.