India, UAE agree on trade settlement in local currencies, linking Fast Payment Systems

ABU DHABI — India and the UAE on Saturday agreed to start trade settlement in their currencies and link their fast payment systems to make international financial interactions simpler and open a campus of IIT-Delhi in the Gulf nation during Prime Minister Narendra Modi’s day-long visit here.

Modi held wide-ranging discussions with UAE President Sheikh Mohamed bin Zayed Al Nahyan during which the two leaders lauded the economic partnership and hoped to achieve the target of USD 100 billion in trade before the G-20 meeting in Delhi in September this year.

The warmth of the bilateral ties was on full display as the UAE President welcomed Modi with a warm embrace at Qasr-al-Watan, the presidential palace, for a ceremonial welcome.

“The manner in which ties between our countries have expanded, you have made a big contribution to that. Every person in India views you as a true friend,” Modi told the UAE President.

After the delegation-level talks, the two sides exchanged three Memoranda of Understanding for the establishment of a framework to promote the use of local currencies for cross-border transactions; for the bilateral cooperation on interlinking their payment and messaging systems; and for planning to establish IIT Delhi campus in Abu Dhabi.

“The MoU on establishing a framework for the use of local currencies for transactions between India and the UAE aims to put in place a Local Currency Settlement System (LCSS) to promote the use of INR and AED bilaterally,” an official statement said.

Under the MOU on Payments and Messaging Systems’, the central banks of the two countries agreed to cooperate on linking their Fast Payment Systems Unified Payments Interface (UPI) of India with the Instant Payment Platform (IPP) of the UAE.

The two sides also agreed to cooperate on linking the respective Card Switches (RuPay switch and UAESWITCH); and exploring the linking of payments messaging systems Structured Financial Messaging System (SFMS) of India with the messaging system in the UAE.

“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,” Modi said.

India’s Ministry of Education and Abu Dhabi’s Education and Knowledge Department signed a memorandum of understanding (MoU) for setting up an IIT Delhi campus in the Gulf country.

The Indian Institute of Technology (IIT) Delhi is the second such institution to announce setting up an offshore campus after IIT Madras. Last week, IIT Madras signed an MoU for setting up a campus in Zanzibar in Tanzania.

In a Joint Statement on Climate Change, the two leaders underscored the urgent need for developed countries to fulfil the USD 100 billion delivery plan and highlighted the importance of the global stocktake (GST) of collective action to achieve the goals of the Paris Agreement.

In his remarks during a meeting with the UAE President, Modi said India-UAE trade witnessed a 20 per cent increase since the signing of the Comprehensive Economic Partnership Agreement last year.

“For the first time, we have achieved USD 85 billion in trade and soon we will achieve the target of USD 100 billion. If we decide, we can cross this milestone before the G20,” Modi said.

Modi said he always received brotherly affection from Sheikh Mohamed bin Zayed Al Nahyan and always felt his commitment to policies.

Modi also noted that preparations for COP-28 to be held in the UAE are going on under the UAE President’s leadership, and added that he has made up his mind to participate in the conference later this year.

A Joint Statement issued during the visit said the leaders resolved to further enhance bilateral partnership in the energy field, both in oil, gas, and renewable energy.

“Both sides will take forward their cooperation in Green Hydrogen, solar energy and grid connectivity. Both sides also agreed to increase investment across the energy spectrum, including in India’s Strategic Petroleum Reserve Programme,” it said.

It said the leaders acknowledged the joint work on issues of climate change, particularly during India’s presidency of the G20 and the UAE’s presidency of COP28.

“They resolved to work together to make COP28 a success for all,” the joint statement said.

Recognising the importance of food security, the leaders reiterated their resolve to promote the reliability and resilience of food supply chains and expand food and agriculture trade, including through food corridor projects in India, it said.

The UAE side will complete its consultations with various Indian stakeholders swiftly for the early realisation of projects in this area, it added.

Modi assured India’s full support for UAE’s COP28 presidency as he held productive talks with the UN climate conference’s President-designate Sultan Al Jaber on ways to further sustainable development and bilateral energy cooperation.