India and UAE set to use rupee, dirham for trade

Contact Counsellor

Last Updated18/07/2023

India recently moved a step closer to increasing circulation of the rupee in the Gulf region with the signing of two MoUs between the Reserve Bank of India and the Central Bank of the United Arab Emirates.
The signing of these agreements was witnessed by UAE President and Indian Prime Minister, who was on a day-long visit to the Gulf country on his way back from France.

Agreement between the RBI and the UAE Central Bank to establish a framework to “promote the use of local currencies (rupee and dirham) for cross border transactions.
Other MoU between the two central banks to interlink their “payment and messaging systems”.
Signing of an MoU on establishing a branch of the Indian Institute of Technology-Delhi in Abu Dhabi.
Agenda of the groupings such as the I2U2 (India, Israel, UAE and USA) and the UAE-France-India trilateral cooperation under which both sides are in collaboration with other powers.

The cooperation will include the mutual acceptance of domestic card schemes by interlinking national card switches.
Integration between these systems will enhance access to payment services for the benefit of the citizens and residents of the two countries.
The move is likely to enhance the trend of doing business in local currencies that gained greater acceptance since the beginning of the Ukraine crisis in February 2022.

Fifth visit by the Indian PM to the UAE.
India-UAE trade rose to $85 billion in 2022.
UAE is India’s third-largest trading partner for 2022-23 and India’s second-largest export destination.
Bilateral trade has increased by approximately 15% since the entry into force of the CEPA on 1 May 2022.