PM Modi visits Abu Dhabi; India, UAE sign pact to trade in ₹, dirham

The two sides also signed a memorandum of understanding  (MoU) on establishing a campus of the Indian Institute of Technology Delhi in Abu Dhabi.

Prime Minister Narendra Modi visited Abu Dhabi yesterday and witnessed the signing ceremony along with Abu Dhabi crown prince Sheikh Khaled Mohamed bin Zayed Al Nahyan, who is also chairman of the Abu Dhabi executive council.

Modi’s visit was aimed at bolstering cooperation in trade, energy and climate action.

The agreements between the two central banks is a ‘very important aspect of India-UAE cooperation’ and paved the way for enhanced economic collaboration and making international financial interactions simpler, Modi tweeted.

The first MoU between the central banks will put in place a Local Currency Settlement System (LCSS) to promote the use of the rupee and dirham, and covers all current account transactions and permitted capital account transactions.

LCSS will enable exporters and importers to pay in their respective domestic currencies and enable development of an INR-AED foreign exchange market, Indian media outlets reported.

RBI feels the arrangement will promote investments and remittances between both sides and reduce transaction costs and settlement time.

India, which pays the UAE in dollars for oil now, could also use this mechanism to pay for import of oil and other commodities.

Under the second MoU, the two central banks will cooperate on linking India’s Unified Payments Interface (UPI) with the UAE’s Instant Payment Platform (IPP), and RuPay switch and UAESWITCH.

The UPI-IPP link will enable users on both sides to make safe, fast and cost-effective cross-border transfers, while the linking of card switches will facilitate mutual acceptance of domestic cards and processing of card transactions.

They will also explore linking India’s Structured Financial Messaging System with the payments messaging system of the UAE.

Fibre2Fashion News Desk (DS)