ABU DHABI (Agencies): In a significant move aimed at reducing reliance on the US dollar, India and the United Arab Emirates (UAE) have agreed to establish mechanisms for settling trade transactions in their respective national currencies.

During Indian Prime Minister Narendra Modi’s visit to the UAE, the central banks of both nations signed a memorandum of understanding to promote the use of the Indian rupee and the Emirati dirham for cross-border trade.

Additionally, the two countries will connect their instant payment systems, India’s Unified Payments Interface (UPI) and the UAE’s Instant Payments Platform (IPP).

Prime Minister Modi highlighted the significance of this agreement, stating, “This is a very important aspect of India-UAE cooperation. It paves the way for enhanced economic collaboration and will make international financial interactions simpler.”

This announcement follows the recent agreement between India and France to use the UPI payment system, with transactions set to commence from the Eiffel Tower. Indian tourists will be able to make payments in rupees using a mobile application.

Foreign Secretary Vinay Mohan Kwatra described the prime minister’s visit to Abu Dhabi as a “landmark in the partnership between India and the UAE,” emphasizing the importance of this development in strengthening bilateral ties.

In addition to the currency agreement, it was announced that the Indian Institute of Technology (IIT) would establish a campus in Abu Dhabi in collaboration with IIT-Delhi. The education ministries of both countries also signed separate agreements on cooperation. Modi praised India’s global ambitions in the education sector, noting, “Education is the bond that unites us, it’s the spark that ignites innovation. Together, we will leverage this power for mutual prosperity and global betterment.”

During bilateral talks with UAE President Sheikh Mohamed bin Zayed Al Nahyan, both leaders expressed satisfaction with the progress of UAE-India relations in various fields. Trade between the two countries reached $85 billion in 2022, making the UAE India’s third-largest trading partner and second-largest export destination. Last year, India and the UAE signed a Comprehensive Economic Partnership Agreement (CEPA), leading to a 15% increase in bilateral trade since its implementation.

The visit also included discussions on investment opportunities, with the Abu Dhabi Investment Authority (ADIA) planning to establish a free zone in Gujarat International Finance Tec-City (GIFT City). Furthermore, Prime Minister Modi announced his participation in COP28, the UN Climate Change Conference, expressing India’s full support for the UAE’s hosting of the event.

The warm relations between the leaders were evident, with President Al Nahyan hosting a banquet at the Qasr-al-Watan presidential palace and serving a full vegetarian meal in honor of Prime Minister Modi’s dietary preferences. The UAE is a vital trade partner for India, employing over 3.5 million Indians and contributing significantly to remittance inflows into India.

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