Indian Ambassador Sunjay Sudhir, Essa Abdulla Al Ghurair, Chairman, Essa Al Ghurair Investment, and Yogesh Mehta, CEO, Petrochem Middle East at the India-UAE Partnership Summit at Dubai Chambers. Image Credit: Virendra Saklani/Gulf News

Dubai: The rupee-dirham non-oil trade could be implemented sooner than any other similar deal, India’s ambassador to the UAE said on Tuesday.

Earlier this week, Thani Al Zeyoudi, the UAE’s Minister of State for Foreign Trade, said that the UAE and India are discussing ways to boost non-oil trade in the countries’ local currencies.

“We are still in early-stage discussions with India on this dirham-rupee trade,” Al Zeyoudi said in an interview in Davos. “This is only going to be focusing on non-oil trade.”

Oil trade in the Indian currency is “not under consideration”, he said.

Other countries, including China, had also raised the issue of settling non-oil trade payments in local currencies, the minister said, but discussions were not at an advanced stage.

The large majority of Gulf trade is conducted in US dollars but countries such as India and China are increasingly seeking to pay in local currencies for various reasons, including low transaction costs.

“That’s something we should be working on,” said Sunjay Sudhir, India’s ambassador to UAE. “We are focusing not only on facilitating trade terms but also remittances.”

Remittances from the UAE now account for 17-18 per cent of India’s total inward remittances. In FY21, remittances amounted to $87 billion, nearly 2.75 per cent of GDP. Sudhir reckons this will bring down the transaction costs and will help the country mitigate geopolitical risks.

“UAE is India’s third largest trading partner, and our current trade value is at $88 billion, we might as well do it in local currency,” said the ambassador. “Because it is very important to de-risk your trade from geopolitics.”

Not just trade partners

Talking on the sidelines of the India-UAE Partnership Summit, Sudhir said fintech is one of the sectors that UAE and India are working on very closely.

Earlier this month, the National Payments Corporation of India (NPCI) said it will now allow Non-Resident Indians (NRI) from 10 countries to make payments through the Unified Payments Interface (UPI).

NRIs having non-resident external (NRE) or non-resident ordinary (NRO) accounts in the 10 selected countries - including the UAE - wouldn’t be required to use an Indian mobile number anymore and make UPI payments through their international numbers, the NPCI has said in a circular.

Initially used for peer-to peer (P2P) transactions, UPI is now the most-preferred platform of transaction in India, both for P2P and peer-to-merchant transactions, especially after the COVID-19 pandemic. The platform is currently supported by 381 banks.

Food security remains key focus

Speaking at the inaugural plenary session of the India-UAE Partnership Summit, Essa Abdulla Al Ghurair, Chairman, Essa Al Ghurair Investment said that food security is the most critical and very big concern for the UAE. And that if India could fulfil this vision, that will be a very important step to cement this bilateral partnership.

He also urged Indian companies to use Dubai and UAE as a platform to showcase their work to the world and capitalise on them. “If you bring (your products and services) here (to the UAE) to this big supermarket hypermarket, then you can show your product and then sell to the rest of the world,” said Al Ghurair. “This is I think one of the areas that the companies could capitalise on showcasing the goods and services in this part of the world for Africa and other countries.”