India's efforts to reduce transaction costs by doing away with dollar conversions have been aided by the signing of an agreement with the United Arab Emirates that will allow it to settle commerce in rupees rather than dollars.
Indian Prime Minister Modi arrived in Abu Dhabi for a day-long visit and had a meeting with President Sheikh Mohamed bin Zayed Al Nahyan.
In order to make cross-border money transfers simpler, the UAE and India also decided to establish a real-time payment link during the visit of Indian Prime Minister Narendra Modi to the UAE on Saturday.
The Reserve Bank of India said in a statement on Saturday that the two agreements would "enable seamless cross-border transactions and payments and foster greater economic cooperation."
India, which is the third-largest importer and user of oil worldwide and whose central bank announced last year a framework for settling international trade in rupees, now pays for UAE oil in dollars.
In the year from April 2022 to March 2023, there was $84.5 billion in bilateral trade between the two nations.
India could pay Abu Dhabi National Oil Co (ADNOC) its first rupee payment for UAE oil, according to a government person, familiar with the agreement's specifics.
According to the Reserve Bank of India, the two central banks have agreed to connect the UAE's Instant Payment Platform (IPP) and India's Unified Payments Interface (UPI).
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