India, UAE may soon start trade payments in rupees and dirhams

India and the United Arab Emirates (UAE) are soon likely to start making payments for bilateral trade in local currencies – Rupees and Dirhams – and target to more than double their non-petroleum trade to $100 billion by 2030, union minister Piyush Goyal said on Monday.

The Reserve Bank of India (RBI) and the Central Bank of the UAE are in active dialogue to facilitate trade in local currencies.

“Both the countries have made significant progress. The Reserve Bank of India and the Central Bank of the UAE have been in very active dialogue,” Goyal said at a media briefing after the first joint committee meeting of India-UAE Comprehensive Economic Partnership Agreement (CEPA).

India and the UAE signed CEPA in February 2022. It came into force from 1st May 2022. In the past one year, the two countries have set up several working groups to resolve the issues related to trade and investments on both sides.

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Allowing trade payment settlement in local currencies is seen as an important step in boosting bilateral trade.

Goyal expressed hope that a decision on Rupee-Dirham trade would be taken soon. “Both countries have made significant progress on this issue. The central banks are in touch and our finance ministry is very supportive,” the minister said.

UAE’s Minister of State for Foreign Trade Thani bin Ahmed Al Zeyoudi co-chaired the first joint committee meeting of India-UAE Comprehensive Economic Partnership Agreement.

Addressing a joint media conference, Al Zeyoudi said trade ties between the two countries have grown up rapidly following the signing of CEPA in 2022.

Under the India-UAE CEPA in the goods domain, the UAE eliminated duties on 97.4 per cent of its tariff lines corresponding to 99 per cent of imports from India. India has obtained immediate duty elimination on over 80 per cent of its tariff lines corresponding to 90 per cent of India’s exports in value terms.

“There are several areas where we are looking to provide a further fillip to our robust trading ties,” Al Zeyoudi added.

During the meeting, the two countries agreed to more than double non-petroleum trade to $100 billion by 2030.

“We have mutually agreed on a target of $100 billion bilateral trade by 2030," Goyal said, adding that the $100 billion target does not include oil trade. “Trade in petroleum will also be increased,” he said.