India-UAE trade push

BARELY five months after India’s Unified Payments Interface (UPI) was integrated with Singapore’s PayNow, India and the UAE have agreed to start trade settlement in their currencies and link their fast payment systems. The move is aimed at making international financial transactions faster, cheaper and transparent. The two sides signed MoUs for the establishment of a framework to promote the use of the rupee and the dirham for cross-border transactions and to interlink their payment and messaging systems. The UPI will now be connected with the UAE’s Instant Payment Platform.

The Local Currency Settlement System, a pact on which was signed between the Reserve Bank of India and the Central Bank of the United Arab Emirates, is in sync with the Digital India programme’s objective of enhancing and expanding digital dealings. Digitisation of the economy has been beneficial in terms of efficiency and transparency, with the number of digital transactions in the country increasing from 127 crore in 2013-14 to around 13,000 crore in 2022-23. It is heartening that the world’s fastest-growing major economy is spreading its wings by tying up with countries such as Singapore and the UAE, which are among the richest in the world. Singapore has an annual per capita income of over $64,000, while the UAE is not far behind with $41,000-plus.

The UAE is India’s key partner, geopolitically as well as economically. Bilateral trade ties had taken a leap last year with the signing of the Comprehensive Economic Partnership Agreement (CEPA). During the first meeting of CEPA’s Joint Committee last month, the two nations had agreed to more than double the trade in non-petroleum products to $100 billion by 2030. The digital push is expected to intensify the inflow of remittances and investments. This promises to be a win-win situation for New Delhi, provided sustained efforts are made to maximise the UPI’s potential as a reliable payment mode.