India pays in rupees for the first time to buy Emirati oil

India and the UAE have started settling bilateral trade in their local currencies, the Indian government said on Monday, adding that India’s largest refiner had paid in rupees to buy 1 million barrels of oil from the Gulf state.

The Indian embassy in the UAE said in a statement that the Indian Oil Corporation paid in rupees to the Abu Dhabi National Oil Company (ADNOC).

The operation comes after a deal that included the sale of 25 kilograms of gold from an Emirati gold source to a buyer in India, at about 128.4 million rupees ($1.54 million).

In July, India signed an agreement with the UAE allowing trade to be settled in rupees instead of dollars, boosting India’s efforts to cut transaction costs by eliminating dollar transfers.

On a visit by Indian Prime Minister Narendra Modi to the UAE, the two countries also agreed to set up a real-time payment link system to facilitate cross-border money transfers.

The bilateral trade volume between India and the UAE reached $84.5 billion between 2022 and 2023.

India is keen to reach similar agreements to pay in local currencies with other countries as it looks to boost exports in light of the slowdown in global trade.

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