India has just completed a trade transaction with the UAE, using its local currency. Its top refiner, Indian Oil Corporation (IOC), paid the Abu Dhabi National Oil Company (ADNOC) in rupees for the purchase of a million barrels of oil.
The Indian embassy in the UAE made the announcement on the transaction. However, it did not disclose the full amount.
Bilateral trade arrangements
Last month, India and the UAE signed an agreement allowing both nations to settle trade transactions in local currencies. With this arrangement, India can rationalize its fiscal position by eliminating the need to pay the UAE in dollars.
The bilateral trade arrangement was finalized during a visit by Indian Prime Minister Narendra Modi to the UAE in 2022. During the same trip, the two also agreed to set up a real-time payment link. This will facilitate easier cross-border money transfers.
Read: UAE and India sign comprehensive economic partnership agreement
The agreements are expected to further boost trade ties between the two nations, which currently stands $84.5 bn. The Indian embassy in the UAE says some of India’s major exports to the UAE include precious metals, stones as well as gems and jewelry. Other notable exports are minerals and refined petroleum products, as well as food items and textiles.
Meanwhile, India’s major imports from the UAE include petroleum and related products, as well as precious metals and stones. Chemicals and food items are also heavily traded between the two,
New payment structure in full swing
The crude oil payment follows another transaction involving the sale of 25 kg gold from a UAE gold exporter to a buyer in India. The buyer paid a total of INR128.4 mn ($1.54 mn) for the purchase.
With these payment arrangements now in full effect, India is hoping to facilitate similar arrangements with other countries. In doing so, it hopes to boost export revenues amid a slowdown in global trade.
In addition, by reducing its reliance on dollar payments, India is streamlining transactional intricacies in its international trading activities.
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