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UAE starts paying for Indian jewellery imports in rupees

UAE India rupees Creative Commons
India’s gems and jewellery exports increased 14.1 percent yerar-on-year to December 2023. The UAE and India signed a MoU in July 2023 to set use their respective local currencies to settle bilateral transactions

The UAE has initiated payment for its gems and jewellery imports from India using Indian rupees, a senior Indian government official has said.

India is already paying for gold imports from the UAE in rupees, Moneycontrol, an Indian website, reported.

The rupee settlement of trade between India and UAE for selected commodities is being done through the “special rupee vostro accounts” mechanism, which was introduced by the Reserve Bank of India in July 2022.

This mechanism allows Indian rupees to be used for invoicing, payment and settlement of exports or imports.

India’s gold imports rose by 156.5 percent year on year to $3.03 billion in December 2023, taking the total for the first nine months to $35.95 billion, a 26.6 percent year on year.

Concurrently, India’s gems and jewellery exports increased 14.1 percent year-on-year in December 2023 to $2.90 billion, data released by the Indian commerce ministry showed.

The rupee settlement of trade between India and UAE comes after a memorandum of understanding signed in July 2023 to set up a framework to use their respective local currencies to settle bilateral transactions.

The system covers all current account transactions and permitted capital account transactions.

In August 2023, India and the UAE concluded the first-ever crude oil transaction through local currencies between Abu Dhabi National Oil Company (Adnoc) and Indian Oil Corporation. The transaction involved the sale of one million barrels of crude oil through the newly implemented local currency settlement system.

The UAE and India signed a comprehensive economic partnership agreement (Cepa) on February 18, 2022, which officially came into effect on May 1, 2022.

Under the Cepa, both countries aim to achieve a bilateral trade of $100 billion within the next five years.

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