On 28 February, the UAE’s ambassador to India, Abdulnasser Alshaali, revealed that technical negotiations between both countries are underway to finalize a rupee-dirham exchange rate for trade as part of efforts to expand upon the free trade agreement that the two nations signed last year, WAM news agency reported.
“The technical conversation is ongoing. There has been an agreement to settle a certain [amount] of trade between the two countries, just not having to go through a third currency. Let’s see, this conversation is an ongoing conversation at the technical level and how they can proceed with it. There are still technical issues to be discussed and agreed on,” Alshaali stressed.
Meanwhile, the Gulf Cooperation Council (GCC) will select a chief negotiator next month, which could speed up negotiations on a free trade agreement between India and the six GCC nations, an unnamed official told the Indian financial daily Mint.
“It will take a year to complete the negotiations as all six member countries in the GCC have their own negotiators, and then there is a GCCs chief negotiator…The submission of a deal has been announced, and the meetings will start soon,” the official said.
GCC countries account for almost 35 percent of India’s oil imports and nearly 70 percent of gas imports.
“Starting talks with the GCC will be beneficial for India as it builds on the deal with the UAE. However, negotiating with the GCC is difficult, so industry consultations are necessary to determine the opportunities and constraints,” Arpita Mukerjee, professor at Indian Council for Research on International Economic Relations (ICRIER), told Mint.
According to Thani bin Ahmed al-Zeyoudi, the Emirati Minister for Foreign Trade, the United Arab Emirates and India are in the early stages of negotiations to exchange non-oil commodities in Indian rupees, Reuters reported on January 18.
The action would build upon a 2022 deal that sought to double non-oil commerce between the two nations to $100 billion by 2027.
Trading in Indian rupees would also represent a significant shift away from the US dollar, which now rules the world’s commodities markets and commerce with countries bordering the Persian Gulf.
The UAE’s Minister told Reuters that although discussions have not yet progressed, China has also thought about paying for non-oil trade in local currencies other than the dollar.