In a significant move to enhance bilateral trade and strengthen economic ties, India and the United Arab Emirates (UAE) have agreed to commence trade settlement in their respective currencies. Additionally, the Indian Unified Payments Interface (UPI) will be linked with the UAE’s Instant Payment Platform (IPP). The announcement came following extensive discussions between Indian Prime Minister Narendra Modi and UAE President Sheikh Mohamed bin Zayed Al Nahyan.
During their meeting, Prime Minister Modi highlighted the substantial growth in India-UAE trade, with a notable 20 percent increase since the signing of the Comprehensive Economic Partnership Agreement between the two nations last year. The decision to facilitate trade settlement in local currencies underscores the deepening economic cooperation and mutual trust shared by India and the UAE.
This landmark agreement is expected to yield several advantages for both countries. By conducting trade in local currencies, India and the UAE aim to reduce their dependence on third-party currencies, such as the US dollar, and minimize transaction costs. It will provide greater flexibility and convenience for businesses engaged in bilateral trade, fostering a more seamless exchange of goods and services. Furthermore, this arrangement will mitigate currency fluctuation risks, offering stability and predictability to traders and investors.
The integration of the Indian UPI and the UAE’s IPP is another significant development in the economic partnership between the two countries. The UPI has gained prominence in India as a widely used digital payments platform, facilitating instant and secure transactions. Linking it with the UAE’s IPP will enable smoother and faster payment transfers between businesses and individuals, enhancing financial connectivity and promoting greater financial inclusion.
This collaboration between India and the UAE holds tremendous potential for further advancing economic ties and stimulating trade and investment. The UAE has been a crucial trading partner for India, and both countries have shown a strong commitment to deepening their economic engagement. The UAE is one of the largest investors in India, with significant investments in sectors such as infrastructure, real estate, energy, and tourism. Conversely, India presents immense opportunities for Emirati businesses across various sectors, including information technology, pharmaceuticals, renewable energy, and food processing.
The trade settlement in local currencies and the integration of payment platforms reflect the forward-looking approach of both nations, focusing on leveraging technology and innovation to enhance economic cooperation. These measures align with India’s broader goal of promoting digital payments and reducing dependence on cash transactions, thereby fostering transparency, efficiency, and financial inclusion.
The UAE has been at the forefront of embracing digital transformation, and its collaboration with India in the realm of payment systems demonstrates its commitment to adopting cutting-edge technologies to advance economic growth. The integration of the UPI and IPP will leverage the strengths and expertise of both platforms, facilitating seamless cross-border transactions and opening up new avenues for collaboration between Indian and Emirati businesses.
This latest development between India and the UAE builds upon the strong foundation of their comprehensive strategic partnership, which encompasses various sectors, including trade, defense, energy, and culture. The two nations have been working closely on multiple fronts, including joint ventures, research and development, and sharing of best practices. The deepening economic ties are not only beneficial for both countries but also contribute to regional and global economic stability.
The agreement to initiate trade settlement in local currencies and integrate payment platforms between India and the UAE marks a significant milestone in their economic relationship. The move demonstrates the commitment of both nations to strengthen bilateral trade, enhance financial connectivity, and promote digital transactions. With a shared vision for mutual growth and prosperity, India and the UAE are poised to unlock new opportunities and usher in a new era of economic cooperation.