India and the United Arab Emirates (UAE) have solidified their commitment to enhanced economic cooperation with the signing of agreements on trade settlement in national currencies. The Memoranda of Understanding (MoUs) aims to facilitate seamless cross-border transactions and payments between the two countries, promoting greater economic collaboration.
Prime Minister Narendra Modi and the Reserve Bank of India’s Governor Shaktikanta Das inked the agreements during a visit to Abu Dhabi, where they met with UAE’s President Sheikh Mohammed Bin Zayed Al Nahyan. The pacts will establish a framework for rupee-dirham transactions, interlink payment, and messaging systems, and enable mutual acceptance of domestic cards through the RuPay and UAESWITCH card switches.
These agreements align with Modi’s vision to elevate the global status of the Indian rupee and position India as a manufacturing alternative to China. While progress in this endeavor has been relatively slow, these recent developments are expected to enhance financial flows between the two nations.
Strengthening ties in multiple sectors
Prime Minister Modi’s visit to Abu Dhabi also paved the way for strengthened cooperation in various sectors beyond economic matters. Alongside the trade settlement agreements, educational authorities from India and the UAE signed an MoU to establish a campus of the prestigious Indian Institute of Technology Delhi in Abu Dhabi. This move signifies a deepening partnership in the field of education and knowledge exchange.
The UAE holds a special place in India’s engagement strategy with West Asian states, and the bilateral relationship has witnessed notable progress in recent years. The UAE is home to a significant Indian expatriate population of 3.5 million, accounting for around 30% of the country’s total population. Furthermore, the signing of the Comprehensive Economic Partnership Agreement (CEPA) in February 2022 further boosted bilateral trade between the two nations.
During his visit, Prime Minister Modi met with Abu Dhabi Crown Prince Sheikh Khaled Mohamed bin Zayed Al Nahyan and engaged in discussions with UAE President Sheikh Mohamed bin Zayed Al Nahyan at the Qasr Al Watan presidential palace. The meetings aimed to foster closer ties and explore avenues for cooperation in areas such as trade, energy, climate action, and security.
Conclusion
The recent agreements signed between India and the UAE mark a significant step forward in strengthening bilateral relations and fostering economic cooperation. By enabling trade settlement in national currencies and establishing a real-time link for cross-border transactions, both countries aim to facilitate smoother financial flows and enhance their economic partnership. The agreements also extend beyond the economic realm, with the establishment of an Indian Institute of Technology campus in Abu Dhabi showcasing the growing collaboration in education.
