UAE, India agree on dirhams and rupees for cross-border transactions
In a momentous event, the UAE and India inked agreements to establish a comprehensive framework aimed at promoting the utilization of local currencies for cross-border transactions. The Central Bank of the UAE's Governor, Khaled Balama, and the Reserve Bank of India's Governor, Shaktikanta Das, signed the agreements in Abu Dhabi, witnessed by President Sheikh Mohamed and Indian Prime Minister Narendra Modi.
UAE and India Forge Path for Enhanced Cross-Border Transactions and Payment Systems
This milestone paves the way for the interlinking of payment and messaging systems, facilitating a local currency settlement system (LCSS) that will foster the bilateral use of the Indian rupee and the dirham. The LCSS will encompass current account and permitted capital account transactions, propelling the development of an INR-AED foreign exchange market and promoting investments and remittances between the two nations.
Strategic Collaboration to Strengthen Financial Infrastructure and Reduce Transaction Costs
The agreements between the UAE and India not only encompass the establishment of a local currency settlement system but also extend to the cooperation in linking their respective fast payment systems. By connecting India's Unified Payments Interface with the UAE's Instant Payment Platform, the collaboration aims to streamline cross-border money transfers, reduce transaction costs, and optimize settlement time. Additionally, the two countries will explore the linking of their Card Switches (RuPay switch and UAESWITCH), enabling the mutual acceptance of domestic cards and the smooth processing of card transactions. These concerted efforts reflect the commitment to enhancing financial infrastructure and promoting seamless monetary transactions between the UAE and India.
Payments Messaging Systems and Economic Growth Stimulus
In parallel with the financial cooperation, the UAE and India are poised to strengthen bilateral financial messaging systems to facilitate smooth and efficient communication in financial matters. This move will bolster the overall framework for bilateral financial transactions and further foster economic collaboration between the two nations. Meanwhile, Minister of Economy Abdullah Al Marri highlighted the adoption of a comprehensive package of initiatives and joint action plans to expand sectors of the new economy in both markets. This strategic collaboration aims to stimulate the growth of Emirati and Indian start-ups, bolstering their contribution to the respective gross domestic products. With a focus on sectors such as circular economy, tourism, aviation, entrepreneurship, renewable energy, and digital transformation, the UAE and India are committed to nurturing their economic ties and propelling further growth.
Strong Progress in Bilateral Non-Oil Trade Underpins the Cepa Agreement
A year after the implementation of the Comprehensive Economic Partnership Agreement (Cepa), the UAE and India have witnessed remarkable growth in bilateral non-oil trade. Driven by the benefits of the Cepa, including enhanced market access, simplified customs procedures, and transparent rules, the two nations experienced a surge in trade volume. Non-oil foreign trade between the UAE and India reached Dh188.8 billion ($51.4 billion) in 2022, marking a significant 15% growth compared to the previous year. Minister of State for Foreign Trade, Dr Thani Al Zeyoudi, emphasized that this robust growth positions the Cepa on track to achieve its ambitious goal of reaching $100 billion in non-oil trade annually by 2030. The Cepa has solidified the strategic relations between the UAE and India, fostering increased economic collaboration and mutual prosperity.