Mumbai: India and the UAE Monday agreed to take steps for the timely implementation of initiatives relating to settlement of trade in local currencies, integration of payment and messaging systems, and central-bank digital currencies, as both sides aim to increase the two-way commerce to USD 200 billion by 2032.
These initiatives have the potential to make bilateral trade and investment more efficient, accessible and resilient, the commerce and industry ministry said in a statement.
The matters came up for discussion during the 14th meeting of the India-UAE High Level Joint Task Force on Investments (HLJTFI) here.
The task force was set up in 2013 to promote trade, investment and economic ties. It serves as a forum to resolve issues faced by investors from both countries.
Commerce and Industry Minister Piyush Goyal and Managing Director of Abu Dhabi Investment Authority (ADIA) Sheikh Hamed bin Zayed Al Nahyan co-chaired the meeting.
“The co-chairs reviewed the progress made by the central banks of the UAE and India on initiatives relating to local-currency settlement, the integration of payment and messaging systems, and central-bank digital currencies…The two sides agreed to take steps to work together to support their timely implementation,” it said.
Meanwhile, addressing media after the meeting, Goyal said that the settlement of trade in local currency it is picking up and is now in double digits as exporters are gradually coming to fully understand its benefits.
In the system, Indian exporters get paid in rupees and imports from UAE are paid in Dirham (AED).
“The benefit of this is that, periodically – say, every three or six months – we can convert the accumulated holdings of each other’s currencies into USD…it can be converted into the international dollar currency on a regular basis,” Goyal said.
The areas where two-way investment flows can be enhanced between the two countries include energy, industry, logistics, infrastructure, technology and artificial intelligence, space, food security, agricultural innovation and the startup ecosystem.
On energy security, Goyal said given the geopolitical situation currently and the uncertainties of the world, the two sides are working to look at expanding strategic petroleum reserves in India.
“The studies are going on and we’ll be seeing significant ramp-up of investments from UAE in this area. We are also exploring the possibility of UAE becoming a more important source of LPG, LNG, and the gas that we require, and also a study is going on to see whether we can also look at subsea pipelines, underwater ocean pipelines, through which gas can be transported and stored in India for more energy resilience and security,” he said.
He added that the two sides have identified six areas to increase cooperation, which include ship ownership, development of modern ports, manufacturing of ships, repair and maintenance of ships, ship breaking, and container manufacturing.
“In these six areas, we’ll set up a working group between the two countries… These six put together provide tremendous opportunity for both countries to learn from each other’s experiences,” Goyal said.
During the HLJTFI meeting, enhancing civil aviation cooperation was discussed between Abu Dhabi and India with an aim to enhance air connectivity. Investment opportunities and collaboration in developing an aviation and logistics hub in Dholera (Gujarat) were also explored.
The bilateral trade has reached USD 101.25 billion in 2025-26. The non-oil trade touched USD 76.2 billion last year. The two nations have implemented a Comprehensive Economic Partnership Agreement (CEPA) in May 2022.
In August 2024, both partners implemented a bilateral investment treaty (BIT) with the aim of protecting and promoting investments.
“The CEPA is now four years old. We have doubled our bilateral trade to USD 100 billion and have set an ambitious target to double it to USD 200 billion by 2032,” Goyal said.
Further, they reviewed the progress of several joint investment projects and areas of collaboration, including the Food Park project in Gujarat.
Both sides noted the expected operationalisation of Invest India, a national investment promotion agency, office in the UAE before the end of 2026.
India and the UAE noted recent Emirates NBD’s about USD 3 billion acquisition of a majority stake in RBL Bank of India, and International Holding Company’s USD 1 billion investment in Sammaan Capital of India, as well as a joint investment intent of USD 11.5 billion in the establishment of an integrated aluminium complex in Odisha.
They also noted the opening of Mashreq Bank, First Abu Dhabi Bank and Abu Dhabi National Insurance Company branch offices in GIFT City in India.
“UAE is one of the largest FDI source of capital. They have already invested USD 25 billion…They have also given their intent to invest another USD 25 billion in near future with the ultimate objective of taking the investments from UAE to USD 100 billion in the years to come,” the Indian minister added.
About areas of investment interest, he said, the UAE are looking at ports, shipbuilding, space, and startups, he said adding “They are also looking at investing in stock markets”.
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In July 2023, the Reserve Bank of India and the Central Bank of the UAE signed two MoUs for establishing a framework to promote the use of local currencies (the Indian rupee (INR) and the UAE Dirham (AED) for cross-border transactions and for cooperation for interlinking their payment and messaging systems.
The MoU on establishing a framework for the use of local currencies for transactions is aimed at putting in place a Local Currency Settlement System (LCSS) to promote the use of INR and AED bilaterally. The agreement covers all current account transactions and permitted capital account transactions.
Creation of the LCSS would enable exporters and importers to invoice and pay in their respective domestic currencies, which in turn would enable the development of an INR-AED foreign exchange market. This arrangement would also promote investments and remittances between the two countries.
The use of local currencies would optimise transaction costs and settlement time for transactions, including for remittances from Indians residing in the UAE.
Similarly, under the MoU on Payments and Messaging Systems, the two central banks have agreed to cooperate on linking their fast payment systems – Unified Payments Interface (UPI) of India with the Instant Payment Platform (IPP) of the UAE and respective Card Switches (RuPay switch and UAESWITCH).
They also agreed to cooperate on exploring the linking of payments messaging systems – Structured Financial Messaging System (SFMS) of India with the messaging system in the UAE.
PTI
