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Business News/ News / India/  India-UAE exploring mechanism to carry out bilateral trade in national currencies
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India-UAE exploring mechanism to carry out bilateral trade in national currencies

This comes as central banks globally are witnessing a depletion in forex reserves owing to the appreciation in the US dollar and rising oil prices in the backdrop of the Russia-Ukraine war

India-UAE trade deal was negotiated in record 88 days and was signed between the two sides on 18 February. (Bloomberg)Premium
India-UAE trade deal was negotiated in record 88 days and was signed between the two sides on 18 February. (Bloomberg)

After signing a free trade agreement in May, India and the UAE are exploring ways to carry out bilateral trade in national currencies, the commerce and industry ministry said on Tuesday. This comes as central banks globally are witnessing a depletion in forex reserves owing to the appreciation in the US dollar and rising oil prices in the backdrop of the Russia-Ukraine war. 

Mint had earlier reported that India’s trade gap with the United Arab Emirates ballooned fourfold in the May-June period, the first two months since the India-UAE free trade agreement came into effect, driven by a jump in oil and gold imports. The country’s trade deficit with the UAE widened to $3.92 billion in the two-month period from $980 million the year earlier.

“An important area discussed was the creation of a mechanism for carrying out bilateral trade in national currencies. Referring to the ongoing discussions between the Reserve Bank of India and Central Bank of the United Arab Emirates on Unified Payment Interface (UPI) as a common digital payments platform, both sides agreed to continue discussions," the ministry said in a statement. 

The ministry further informed that the UAE has sought tax incentives for certain UAE sovereign investment entities under the existing UAE-India Tax Treaty and both countries are exploring 

establishment of efficient and integrated Single Window Solutions and Virtual Trade Corridors to reduce costs and time involved in trade and investment-related procedures.

The tenth meeting of the UAE-India High-Level Joint Task Force on Investments took place today in Mumbai. It was co-chaired by Piyush Goyal, Minister of Commerce & Industry, Government of India, and His Highness Sheikh Hamed bin Zayed Al Nahyan, Member of the Executive Council of the Emirate of Abu Dhabi.

The Joint Task Force was established in 2013 to promote trade, investment and economic ties between the UAE and India. This was the first meeting of the Joint Task Force since the signing of the India-UAE Comprehensive Economic Partnership Agreement (CEPA). 

India UAE trade deal was negotiated in record 88 days and was signed between the two sides on 18 February. It is the first major free trade pact signed by the Narendra Modi-led government since it came to power in 2014 and is likely to benefit about $26 billion worth of Indian products that are subjected to 5% import duty by the UAE.

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Published: 11 Oct 2022, 08:48 PM IST
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