NEW DELHI, July 15 (Reuters) – India has signed an agreement with the United Arab Emirates that will allow trade to be settled in rupees instead of dollars, boosting India’s efforts to cut transaction costs by eliminating dollar conversion.
During Indian Prime Minister Narendra Modi’s visit to the UAE on Saturday, the two countries agreed to set up a real-time payment link to facilitate easy cross-border money transfers.
The two agreements will “encourage seamless cross-border transactions and payments and greater economic cooperation”, the Reserve Bank of India said in a statement on Saturday.
India, the world’s third-largest oil importer and consumer and whose central bank last year announced a framework for settling global trade in rupees, currently pays in dollars for UAE oil.
Bilateral trade between the two countries was $84.5 billion from April 2022 to March 2023.
India may make its first rupee payment for UAE oil to Abu Dhabi National Oil Co (ADNOC), Reuters reported on Friday, an official with knowledge of the details of the deal said.
The Reserve Bank of India said the two central banks have agreed to link India’s Unified Payments Interface (UPI) and UAE’s Instant Payments Platform (IPP).
Such arrangements, which are a growing trend in Asia, generally reduce payment costs.
Modi arrived in Abu Dhabi on Saturday on a one-day visit and met President Sheikh Mohammed bin Zayed Al Nahyan.
Reporting by Arpan Chaturvedi; Editing by Clelia Oziel
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