UAE and India will be able to trade more with each other now that there is a new law about the rupee. It’s about a new deal and moves that let companies in the UAE and India pay for goods and services directly in Indian rupees instead of US dollars or other foreign currencies. The Central Bank of the UAE and the Reserve Bank of India made this deal as part of a larger plan to use local currencies for payments. The goal is to make it easy to do business across borders and depend less on the dollar.
Important features of this development include:
System for paying in local money: A Memorandum of Understanding (MoU) was signed in July 2023 to set up this system. It lets people in India and the UAE buy and sell things and services and pay for them with rupees and dirhams. This makes things go more easily and could even save you money.
Unifying different payment systems: The Unified Payments Interface (UPI) from India is being linked to the UAE’s quick payment platform (AANI), and the RuPay card from India is being linked to the UAE’s JAYWAN card network. These projects want to improve the speed and ease of sending money between countries and make digital payments work better.
How to Accept and Use the Rupee: The Indian rupee has been accepted as money at Dubai airports since July 2023. In August 2023, when the rupee-dirham settlement system went live, the Indian Oil Corporation made its first rupee payment for imported crude oil.
What Happens to Trade Between Two Countries?
The United Arab Emirates is India’s third-biggest trading partner. India UAE relations boost when they did $83.6 billion worth of business together in 2023–24. Even more trade should be made possible by the rupee norm and other systems that work with it. These systems lower the risks of currency exchange and make deals clearer and faster.
Economists and government officials both agree that the “new rupee rule” changes the game. It makes the comprehensive economic cooperation (CEPA) agreement that was signed in 2022 stronger and shows that the economies of the two countries are coming together more. It helps India make its currency more widely used around the world and fits with the UAE’s plan to become a big hub for international trade and finance.
A trade corridor between India, the Middle East, and Europe, as well as internet trade corridors that make it easier for countries to trade without paper, are linked to this change. These are new ways for countries to work together on their economies.
