Introduction

India and the UAE have started settling bilateral trade in their local currencies, the Indian government said on Monday. This move aims to reduce transaction costs and dependence on the US dollar.

Oil Refinery Transaction

India’s largest oil refinery paid Rs. rupees to buy 1 million barrels of oil from the Gulf state. The Indian Embassy in the UAE confirmed that the Indian Petroleum Corporation made the payment to the Abu Dhabi National Oil Company (ADNOC).

Gold Sale

In addition to the oil transaction, a deal was also struck for the sale of 25 kilograms of gold from an Emirati source to a buyer in India for around 128.4 million rupees ($1.54 million).

Agreements

In July, India signed an agreement with the UAE to allow trading in rupees instead of dollars, which aims to reduce transaction costs. During Indian Prime Minister Narendra Modi’s visit to the UAE, the two countries also agreed to set up a real-time payment system for cross-border money transfers.

Bilateral Trade Volume

The volume of bilateral trade between India and the UAE reached $84.5 billion between 2022 and 2023.

Future Plans

India is seeking similar local currency settlement agreements with other countries as it aims to increase exports amidst the global trade slowdown.