India and the United Arab Emirates have embarked on a new approach to bilateral trade, utilizing their respective local currencies. The leading Indian refiner, Indian Oil Corp, has executed a payment in Indian rupees for the purchase of one million barrels of oil from the UAE, specifically from the Abu Dhabi National Oil Company (ADNOC). The Indian embassy in the UAE released a statement confirming this transaction.
This development follows another transaction involving the sale of 25 kg of gold from a UAE-based gold exporter to an Indian buyer, amounting to approximately 128.4 million rupees ($1.54 million).
The move towards trading in rupees stems from a July agreement between India and the UAE, which allows them to settle trade deals in their local currencies rather than relying on US dollars. This shift aligns with India’s efforts to streamline trade processes by eliminating the need for dollar conversions.
During a visit by Indian Prime Minister Narendra Modi to the UAE, the two nations additionally reached an accord to establish a real-time payment system, designed to facilitate smoother cross-border money transfers.
The bilateral trade volume between India and the UAE reached $84.5 billion in the fiscal year 2022/23. This innovative approach reflects India’s eagerness to replicate similar local currency arrangements with other countries, a strategic move to enhance exports in the face of a global trade slowdown.
