India and UAE Embrace Bilateral Trade in Rupees, Ushering in a New Era of Economic Cooperation in 2023

India Shuns Dollars, Chooses Domestic Currency for Bilateral Trade with UAE

By undertaking bilateral transactions utilizing their respective home currencies, India and the United Arab Emirates have started a revolutionary journey that marks a substantial divergence from traditional trade dynamics.

The recent completion of a landmark transaction by Indian Oil Corp, a major petroleum refiner in India, brought this paradigm change to the fore. Additionally, the payment for the company’s purchase of one million barrels of oil from the UAE was paid in Indian rupees. This historic action highlights the strength of this developing economic alliance in addition to signaling a significant change in trade mechanisms. The payment was made to the Abu Dhabi National Oil Company (ADNOC), according to the UAE’s Indian embassy’s official statement.

With the signing of a deal between India and the UAE in July, the groundwork for this transition was set up. Through this agreement, rupees, as opposed to the US dollar, By doing so, India is strategically optimizing its trade processes by eliminating the need for bothersome currency conversions and complexities associated with it

The implementation of a real-time payment linkage is one of this growing economic relationship’s most novel features. This innovative system was developed during Prime Minister Narendra Modi’s visit to the UAE and aims to streamline international fund transfers. This encourages increased ease and convenience in trade while also ushering in a new era of financial cooperation between the two countries.

In terms of statistics, the amount of bilateral commerce between India and the UAE in the fiscal year 2022–2023 was a remarkable $84.5 billion. By lowering its dependence on the US dollar and eliminating transactional complexities, India is determined to alter its trade landscape.

The decision by India and the UAE to undertake bilateral trade in their national currencies marks a paradigm shift in global trade. This forward-thinking attitude not only improves economic ties but also paves the way for more organized and effective trade between these two powerful countries.

‘Bilateral Trade’ Article By Debanjana Talukdar

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