India and the United Arab Emirates (UAE) have taken significant steps to enhance their bilateral relationship and strengthen economic cooperation. During Prime Minister Narendra Modi's visit to Abu Dhabi, the two countries signed agreements to initiate trade settlement in their respective national currencies, the Rupee and Dirham. This move aims to simplify international financial transactions and promote trade between the two nations. Additionally, they agreed to link their fast payment systems, such as the Unified Payments Interface (UPI) of India and the Instant Payment Platform (IPP) of UAE, to facilitate seamless cross-border fund transfers. These measures will enable users in both countries to conduct fast, secure, and cost-effective transactions.
Furthermore, another significant agreement was signed to establish a campus of the Indian Institute of Technology Delhi (IIT-Delhi) in Abu Dhabi. This collaboration in the field of education will provide opportunities for academic exchange and enhance the knowledge-sharing between the two countries.
The joint statements issued by Prime Minister Modi and President Sheikh Mohamed bin Zayed Al Nahyan also highlighted their cooperation on climate change. Both leaders emphasized the urgent need for developed countries to fulfill the $100 billion delivery plan and emphasized the importance of collective action to achieve the goals of the Paris Agreement. The UAE, as the host of the 2023 United Nations Climate Change Conference, will play a crucial role in addressing global climate challenges.
The signing of the Memorandum of Understanding (MoU) between the Reserve Bank of India (RBI) and the Central Bank of UAE (CBUAE) is a significant milestone. This MoU establishes a framework to promote the use of local currencies, the Indian Rupee (INR) and the UAE Dirham (AED), for cross-border transactions. It will facilitate the development of an INR-AED foreign exchange market, optimize transaction costs, and reduce settlement time for transactions, including remittances from Indians residing in the UAE.
The implementation of the Local Currency Settlement System (LCSS) under this MoU is already underway, with a gold exporter of the UAE being the first user of this system. This transaction, valued at Rs 12.84 crore for 25 kgs of gold, demonstrates the practical application and effectiveness of the LCSS.
The MoU on 'Payments and Messaging Systems' is another crucial agreement that will enhance financial connectivity between the two countries. By linking the fast payment systems and card switches of India and the UAE, users will benefit from convenient, secure, and efficient cross-border fund transfers and card transactions. Moreover, the linkage of messaging systems will facilitate bilateral financial messaging, strengthening communication and coordination in the financial sector.
Overall, these agreements and initiatives signify the deepening ties between India and the UAE. They pave the way for greater economic integration, enhanced trade relations, and increased cooperation in education and finance. The use of local currencies and the linkage of payment systems will contribute to the growth and development of both nations, fostering a mutually beneficial partnership for years to come.
