The UAE and India are working on a trade deal that will allow businesses to trade in local currencies.
The UAE Central Bank is in discussion with the Reserve Bank of India to develop a trading mechanism that will encourage bi-lateral relations between the two well-established partners, India’s ambassador to the UAE Sunjay Sudhir said.
During a typical trade, importers and exporters lose money during a currency exchange.
India and UAE trade deal
The two central banks are discussing a mechanism which will allow a percentage of trade to be covered direct through dirham-rupee transactions.
“India has prepared a concept paper (regarding rupee-dirham trade) and has shared it with the UAE,” said Sudhir.
“UAE’s central bank has already designated a nodal person for this. The discussion is now going on between the central banks…[it] will be seen how in a realistic scenario, the whole concept can be operationalised.”
Sudhir added that the objective is to reduce the cost of transaction and said the idea is not to have trade using a third currency.
At the meeting between Mohamed bin Hadi Al Hussaini, minister of state for financial affairs, and Nirmala Sitharaman, minister of finance and corporate affairs, the two sides also deliberated on the priorities set by India in its upcoming G20 Presidency and the ways the UAE can support these priorities.
UAE is India’s third-largest trade partner and second-largest export market.
The country and the UAE signed a free trade agreement earlier this year and hope to see $100bn bilateral trade in the next five years.
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