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India and UAE enhance energy partnership during PM Modi’s Abu Dhabi visit, agree to use local currencies for cross-border transactions

Prime Minister Narendra Modi with UAE President and the Ruler of Abu Dhabi, Sheikh Mohamed bin Zayed Al Nahyan in Abu Dhabi on Saturday (Image courtesy: MEA)

India and the United Arab Emirates (UAE) on Saturday agreed to further enhance bilateral partnership in the energy field -oil, gas, and renewable energy – besides also signing a Memorandum of Understanding (MoU) for the establishment of a framework to promote the use of local currencies (INR-AED) for cross-border transactions by Governors of the respective Central Banks.

The decision was taken as Prime Minister Narendra Modi and UAE President and the Ruler of Abu Dhabi Sheikh Mohamed bin Zayed Al Nahyan held wide-ranging discussions during delegation level and one-on-one talks in Abu Dhabi on Saturday.

Both sides will also take forward their cooperation in green hydrogen, solar energy and grid connectivity and increase investments across the energy spectrum, including in India’s Strategic Petroleum Reserve Programme.

PM Modi arrived in Abu Dhabi Saturday morning, straight from Paris after concluding a highly-successful visit to France.

In a special gesture, reflecting New Delhi’s strong ties with the UAE, the Prime Minister was warmly welcomed by Crown Prince of Abu Dhabi, Sheikh Khaled bin Mohamed bin Zayed Al Nahyan at the airport, followed by a ceremonial welcome and guard of honour.

This was PM Modi’s fifth visit to the UAE in the last eight years during which relations between the two countries have witnessed tremendous progress on all fronts and the relationship has been elevated to a Comprehensive Strategic Partnership.

India-UAE trade has risen to USD 85 billion in 2022, making the UAE India’s third-largest trading partner for the year 2022-23 and India’s second-largest export destination. India is the UAE’s second largest trading partner. In February 2022, India became the first country with which the UAE signed a Comprehensive Economic Partnership Agreement (CEPA). Bilateral trade has increased by approximately 15% since the entry into force of the CEPA on May 1, 2022.

The signing of MoUs on interlinking payment and messaging systems by Governors of the respective Central Banks and for planning to establish Indian Institute of Technology – Delhi in Abu Dhabi also took place on Saturday.

IIT Delhi – Abu Dhabi will become operational by January 2024 by offering a Master’s program in Energy Transition and Sustainability.

Both leaders discussed that developing the Local Currency Settlement System between the two countries to settle bilateral trade is a reflection of mutual confidence. Moreover, it underlines the robustness of the economies in both countries and enhances the economic engagement between the UAE and India.

“The leaders expressed their interest in strengthening cooperation in the payment systems area by enabling integration between their instant payment systems to process cross-border transactions between the UAE and India more efficiently. Such cooperation will also include the mutual acceptance of domestic card schemes by interlinking national card switches,” a joint statement released after the meeting mentioned.

PM Modi and Sheikh Mohamed bin Zayed Al Nahyan also reaffirmed their joint commitment to the fight against extremism and terrorism, including cross-border terrorism, in all forms, at both the regional and international levels.

“They agreed to further deepen their bilateral cooperation in the fight against terrorism, terrorist financing, and extremism. In this context, they emphasized the importance of promoting the values of peace, moderation, coexistence, and tolerance among peoples and stressed the need for all forms of extremism, hate speech, discrimination, and incitement to be renounced,” added the joint statement.

They appreciated the plan of Abu Dhabi Investment Authority (ADIA) to set up a presence in Gujarat International Finance Tec-City (GIFT City), a financial free zone in Gujarat, in the next few months. This will further facilitate investment opportunities for the UAE in India.

Both countries acknowledged the joint work on issues of climate change, particularly during India’s presidency of the G20 and the UAE’s presidency of COP28. They resolved to work together to make COP28 a success for all.

Noting the significant global roles played by both countries in 2023, Prime Minister Modi said that he is looking forward to the participation of Sheikh Mohamed bin Zayed Al Nahyan in the G20 Leaders’ Summit scheduled to be held in New Delhi in September.

Also Read: PM Modi begins UAE visit extending India’s West Asia outreach