India, UAE Central Banks Discuss Rupee-Dirham Trade Prospects: The central banks of India and UAE are discussing a concept paper on promoting bilateral trade in rupee and dirham with a view to reduce transaction cost, a top official said.
Concerning the Development: Sunjay Sudhir, India’s Ambassador to the UAE, stated that India shared the concept paper for trade in local currencies. Both countries’ central banks will meet to discuss standard operating procedures and modalities.
Need Of This move: The objective of the exercise is to lower transaction costs. In February, India and the UAE signed a free trade agreement (FTA) to strengthen bilateral trade and economic ties. The free trade agreement was aimed at providing significant benefits to Indian as well as UAE businesses, including enhanced market access and reduced tariffs. As a result of the free trade agreement, bilateral trade is expected to increase from USD 60 billion to USD 100 billion over the next five years.
The Current Trade Situation: In 2020-21, bilateral trade between India and the UAE was valued at USD 43.3 billion. Exports were worth USD 16.7 billion and imports aggregated at USD 26.7 billion in 2020-21. In 2019-20, two-way commerce was worth USD 59.11 billion.