India and UAE Sign Landmark Trade Deal to Settle Transactions in indian Rupees

Historic Agreement Aims to Strengthen Economic Cooperation and Cut Transaction Costs

Jul 15, 2023 - 08:46
Jul 15, 2023 - 08:47
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India and UAE Sign Landmark Trade Deal to Settle Transactions in indian Rupees
India and UAE Sign Landmark Trade Deal to Settle Transactions in indian Rupees

India and the United Arab Emirates (UAE) have entered into a groundbreaking trade agreement that will revolutionize their financial relations. The deal allows trade transactions to be settled in Indian rupees, eliminating the need for dollar conversions and significantly reducing transaction costs. During a recent visit by India's Prime Minister Narendra Modi to the UAE, the two nations also established a real-time payment link to facilitate seamless cross-border money transfers, fostering greater economic cooperation. The move marks a significant shift in how the countries conduct international trade and opens up new opportunities for strengthened partnerships.

Boosting Trade Relations:

India and UAE's Milestone Agreement India and the UAE have forged a historic trade agreement aimed at transforming their financial interactions. The deal allows trade transactions between the two nations to be settled in Indian rupees, eliminating the complexities of converting currencies and reducing transaction costs significantly. The move comes as part of India's efforts to streamline international trade operations and foster closer economic cooperation with the UAE.

Cutting Transaction Costs:

Shifting from Dollars to Rupees By embracing the use of Indian rupees for settling trade transactions, both India and the UAE are set to cut transaction costs substantially. The move is expected to benefit businesses on both sides and stimulate further trade activities between the nations. This shift represents a significant milestone in their financial dealings and opens new possibilities for seamless cross-border transactions.

Seamless Cross-Border Payments:

Real-Time Payment Link Established As part of the agreement, India and the UAE have established a cutting-edge real-time payment link to facilitate easier cross-border money transfers. This technological advancement is expected to streamline financial transactions and enable quick and efficient payments between the two countries. The real-time payment link is seen as a crucial step towards fostering greater economic cooperation.

Strengthening Economic Ties:

Focus on Greater Cooperation With the signing of this agreement, both India and the UAE are aiming to strengthen their economic ties and explore new avenues of cooperation. The move is expected to create a conducive environment for businesses and investors, fostering economic growth and mutual prosperity.

Oil Transactions in Rupees:

India's Strategic Move India, being the world's third-largest oil importer and consumer, has been paying for UAE oil in US dollars until now. With this historic agreement, the rupee will now be used as the currency for oil transactions between the two nations, marking a significant shift in their financial dealings and trade relations.

Flourishing Bilateral Trade:

Impressive $84.5 Billion in Exchange The bilateral trade between India and the UAE has been witnessing substantial growth, with trade reaching an impressive $84.5 billion during the period from April 2022 to March 2023. The agreement is expected to further bolster trade activities and enhance economic cooperation.

Efficient Payment Systems:

India's Unified Payments Interface and UAE's Instant Payment Platform The two countries are set to integrate their payment systems to enable seamless cross-border transactions. India's Unified Payments Interface (UPI) will be linked to UAE's Instant Payment Platform (IPP), ensuring faster and more efficient payments. This integration is a growing trend in Asia and is expected to lower transaction costs and promote economic cooperation.

Major Milestone Ahead:

First Rupee Payment for UAE Oil Sources indicate that India may soon make its first rupee payment for UAE oil to the Abu Dhabi National Oil Co (ADNOC), marking a significant step in implementing the agreement. This move is likely to set the stage for further transactions in rupees between the two countries.

Building Diplomatic and Economic Relations:

Prime Minister Modi's Visit to UAE Prime Minister Narendra Modi's visit to Abu Dhabi holds great significance as it seeks to foster stronger diplomatic and economic relations between India and the UAE. During his one-day visit, he met with UAE President Sheikh Mohamed bin Zayed Al Nahyan to discuss various areas of mutual interest and cooperation.

In conclusion, the India-UAE trade agreement to settle transactions in rupees is a major milestone in their economic partnership. The move is expected to enhance economic cooperation, reduce transaction costs, and strengthen diplomatic ties between the two nations. With a focus on seamless cross-border payments and fostering greater economic collaboration, India and the UAE are poised to usher in a new era of financial cooperation and growth.

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