India and Uae :: The New Beginnings.

INDIA And UAE as Emerging Partner.

In this blog we are going to discuss the local currency trade between India and UAE. As we all know that India and UAE are emerging partner in the Middle East,in the recent times this two countries have traded in several commodities apart from trade their geopolitical relations have flourished over the past span of time.

1. India and UAE:

HOW  Are INDIA's Bilateral Relations With UAE

• India and the UAE established diplomatic relations in 1972.
• The greater push has been achieved in bilateral relations when the visit of  India's Prime Minister to the UAE in august 2015 marked the beginning of new strategic partnership between two countries.
• This gave momentum to launching negotiations for an India and UAE comprehensive economic partnership agreement.

2.The recent signing of the India and UAE Comprehensive Economic Partnership Agreement(CEPA)

What's the Economic Significance of the UAE?

• The UAE has emerged as an important economic hub not just within the context of the Middle East/West Asia,but also globally.
• In recent years, the UAE,through its 'Vision 2021', has sought to diversify its economy and reduce its dependency on oil.
• Since 2012,growth has been led,according to a World Trade Organisation document,by the non-hydrocarbon sectors reflecting the successful diversification of the economy.
• A trade agreement is also and an enabler for two-way investment flows.The UAE'S investment in India is estimated to be around U.S. $11.67 billion,which makes it the ninth biggest investor in India
• Also,many Indian companies have set up manufacturing units either as joint ventures or in Special Economic Zones for cement,building materials,textiles,engineering products,consumer electronics,etc. in the UAE. 

3.The payment system and trade significance

UPI-IPP:

• The central banks of both countries have signed to cooperate on linking India's Unified Payments Interface(UPI) with the UAE's Instant Payment Platform(IPP) and Rupay switch and UAESWITCH.
• The UPI-IPP link will enable users in both countries to make fast,safe and cost-effective cross-borders transfers.
• The linking of card switches will facilitate the mutual acceptance of domestic cards and the processing of card transaction.
• They will also explore the linking of India's Structured Financial Messaging System(SFMS) with the paymnets messaging system of the UAE. 

4.Globalisation of Rupees

What is the significance of Rupee based cross border transaction?

• India is looking to work out a way to mitigate exchange rate risks in the rupee based trade to limit losses for Indian exporters.
• The rupee-based transaction is part of a concentrated policy effort by India to Internationalize the Rupee to bring down the dollar demand.
• The RBI's plan to settle international trade in the local currency will let importers make payments in the rupee,which will be credited to the special account of the correspondent bank of the partner country,while exporters will be paid from the balances in the designed special account.