India and UAE to encourage local currency in bilateral trades. Delhi IIT to set up Campus in Abu Dhabi

India signed an agreement with the UAE that will allow it to settle trade in rupees instead of US dollars

India signed an agreement with the UAE that will allow it to settle trade in rupees instead of US dollars
India signed an agreement with the UAE that will allow it to settle trade in rupees instead of US dollars

Trade in rupees, IIT Delhi campus in Abu Dhabi: All about PM Modi’s visit to UAE

India and the United Arab Emirates (UAE) on Saturday discussed the whole range of their bilateral ties during talks between Prime Minister Narendra Modi and President of UAE Sheikh Mohamed bin Zayed Al Nahyan, President of the UAE in Abu Dhabi. The two leaders also witnessed the inking of three agreements including a framework to promote the use of local currencies for cross-border transactions and the setting up of the IIT Delhi campus in Abu Dhabi. The third deal was a memorandum of understanding (MOU) between the Reserve Bank of India and the Central Bank of UAE for bilateral cooperation on interlinking their payment and messaging systems.

Giving details of the delegation level and one-on-one talks between the two leaders, the Ministry of External Affairs (MEA) said later they held wide-ranging discussions covering various dimensions of the bilateral partnership. The issues included trade and investment, fintech, energy, renewables, climate action, higher education, and people-to-people ties. The discussions also covered regional and global issues.

The joint statement issued after the parleys said it was the fifth visit of Prime Minister Modi to the UAE in the last eight years. He last visited the UAE in June 2022 when he visited Abu Dhabi to meet Sheikh Mohamed bin Zayed Al Nahyan to convey his greetings as His Highness assumed the presidency of the UAE. Regarding the talks on Saturday, the statement said the two leaders discussed that developing the Local Currency Settlement System (LCSS) between the two countries to settle bilateral trade reflects mutual confidence. Moreover, it underlines the robustness of the economies in both countries and enhances the economic engagement between the UAE and India.

The leaders expressed their interest in strengthening cooperation in the payment systems area by enabling integration between their instant payment systems to process cross-border transactions between the UAE and India more efficiently. Such cooperation will also include the mutual acceptance of domestic card schemes by interlinking national card switches. Integration between these systems will enhance access to payment services for the benefit of the citizens and residents of the two countries.

The leaders expressed satisfaction that UAE-India relations have witnessed tremendous progress. India-UAE trade rose to USD 85 billion in 2022, making the UAE India’s third-largest trading partner for the year 2022-23 and India’s second-largest export destination. India is the UAE’s second-largest trading partner.

In February 2022, India became the first country with which the UAE signed a Comprehensive Economic Partnership Agreement (CEPA). Bilateral trade has increased by approximately 15% since the entry into force of the CEPA on 1 May 2022. The leaders noted the significant global roles played by both countries in 2023, with India’s presidency of the G20 and the UAE’s presidency of COP28.

The leaders reiterated their resolve to further strengthen investment ties between the two countries. In this context, they appreciated the efforts of the bilateral High-Level Joint Task Force of Investments. They acknowledged that the UAE became the fourth largest investor in India in 2022-2023, compared to the seventh in 2021-2022. They appreciated the plan of the Abu Dhabi Investment Authority (ADIA) to set up a presence in Gujarat International Finance Tec-City (GIFT City), a financial-free zone in Gujarat, in the next few months. This will further facilitate investment opportunities for the UAE in India.

The leaders resolved to further enhance bilateral partnerships in the energy field, both in oil, gas, and renewable energy. Both sides will take forward their cooperation in Green Hydrogen, solar energy, and grid connectivity. Both sides also agreed to increase investment across the energy spectrum, including in India’s Strategic Petroleum Reserve Programme.

Recognizing the importance of food security, the leaders reiterated their resolve to promote the reliability and resilience of food supply chains and expand food and agriculture trade, including through food corridors projects in India. The UAE side will complete its consultations with various Indian stakeholders swiftly for the early realization of projects in this area.

The leaders noted that people-to-people contacts, which date back centuries, are one of the strongest and most important pillars of the historic India-UAE ties. The UAE expressed appreciation that the large Indian diaspora continues to play a significant role in the society and economy of the UAE and further reinforces bilateral relations.

They agreed to further strengthen bilateral collaboration to strengthen maritime security and connectivity in the region to promote prosperity in India, the UAE, and the shared neighborhood. They also agreed to enhance defence exchanges, sharing of experiences, training, and capacity building. Modi and Nahyan reaffirmed their joint commitment to the fight against extremism and terrorism, including cross-border terrorism, in all forms, at both the regional and international levels.

Both leaders emphasized the importance of multilateralism and called for collective action to promote a just, rules-based global order. The two leaders also expressed satisfaction with the coordination between the two sides on UN Security Council matters, especially in 2022, when both countries served as non-permanent members of the UNSC.

Both leaders reaffirmed their commitment to further strengthening the Comprehensive Strategic Partnership, exploring emerging areas of collaboration, and promoting peace, stability, and prosperity in the region and beyond.

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