India and the United Arab Emirates have made a significant stride in enhancing their economic relationship by signing an agreement to conduct trade using the Indian rupee instead of the US dollar. This move is expected to bring multiple benefits, including reducing transaction costs and eliminating the need for currency conversions, thereby streamlining trade between the two nations.
In addition to the currency agreement, India and the UAE have also established a real-time payment link, enabling efficient cross-border money transfers. This development is aimed at facilitating seamless financial transactions and enhancing the overall trade ecosystem.
The significance of this agreement is underscored by the substantial bilateral trade volume between India and the UAE. With trade between the two countries amounting to $84.5 billion from April 2022 to March 2023, both nations stand to gain from a more efficient and cost-effective trade settlement mechanism.
By settling trade in Indian rupees and establishing a real-time payment link, India and the UAE are taking concrete steps to strengthen their economic ties and foster greater collaboration in various sectors. This move is expected to enhance trade flows, promote investment, and deepen the economic partnership between the two nations.
