
The United Arab Emirates and India are in early discussions to settle non-oil trade payments in Indian rupees, according to UAE Minister of Foreign Trade Dr Thani Al Zeyoudi.
The talks are part of a broader effort by both countries to increase bilateral trade and reduce their reliance on the US dollar.
Al Zeyoudi said that the discussions are still in the early stages, but that there is a willingness from both sides to explore the possibility of settling non-oil trade in rupees.
He noted that other countries, including China, have also expressed interest in settling non-oil trade payments in local currencies.
The move to settle non-oil trade in rupees would be a significant shift for the Gulf Arab states, which have traditionally used the US dollar for most of their trade transactions.
However, there are a number of potential benefits to settling trade in rupees.
First, it would reduce the cost of doing business for both countries.
Second, it would give the Indian rupee greater international prominence.
Third, it would make the UAE and India less reliant on the US dollar, which could help to reduce geopolitical risk.
It is important to note that there are also some challenges that would need to be addressed before non-oil trade could be settled in rupees.
One challenge is that the UAE and India would need to develop a robust system for exchanging rupees.
Another challenge is that businesses on both sides would need to be comfortable using rupees in their transactions.
Despite the challenges, the potential benefits of settling non-oil trade in rupees are significant.
Both the UAE and India are keen to explore this possibility, and it is likely that we will see more progress on this issue in the coming months.
Implications for UAE Businesses
The potential shift to settling non-oil trade in rupees could have a number of implications for UAE businesses.
First, businesses that export to India would need to be prepared to accept payments in rupees.
This may require businesses to develop new relationships with Indian banks and payment processors.
Second, businesses that import from India may be able to save money on transaction costs by paying in rupees.
Third, the increased use of rupees in trade between the UAE and India could make the UAE more attractive to Indian investors.
Overall, the potential shift to settling non-oil trade in rupees could be a positive development for UAE businesses.
However, it is important for businesses to be aware of the challenges involved and to start planning accordingly.