India Buys One Million Barrels of Crude Oil from UAE in Rupees For the First Time

For the first time, a transaction has taken place between India and the UAE in local currency. India has paid for 1 million barrels of oil in rupees and the UAE currency in dirhams. This information has been provided by the Indian Embassy in UAE. The deal is reported to have been done on Monday between UAE’s Abu Dhabi National Oil Company and Indian Oil Corporation.

Oil imported from the UAE plays an important role in India’s energy security. The UAE is the fifth largest country from which India sources its crude oil needs. On the other hand, there is such a large country from where LNG and LPG are imported. In such a situation, payment in local currency between the two countries may prove beneficial for India.

Declining Dollar

As Firstpost reports, transacting in the local currency reduces transaction costs and saves time. The Local Currency Settlement Agreement was signed between India and the UAE on 15 July 2023 in the presence of Prime Minister Narendra Modi and President Zayed Al Nahyan.

Earlier, oil imported from UAE was paid in dollars. Now the use of rupees and dirhams for such transactions is being seen as de-dollarization i.e. the status and use of dollars has decreased. IMF has held America responsible for this in one of its reports.

What Does India Export to UAE?

India’s major exports to the UAE include petroleum products, metals, stones, gems and jewellery, minerals, food items such as cereals, sugar, fruits and vegetables, tea, meat and seafood, textiles, engineering machinery products and chemicals.

UAE is India’s Third Largest Trading Partner

UAE is India’s third largest trading partner. The trade between the two countries is more than 6 lakh crore rupees. In which UAE has imported 2 lakh crore rupees from India.