India and United Arab Emirates have started bilateral trade in mutual currency instead of US dollar.
The Government of India has told on Monday that India's top oil company Indian Oil has bought one million barrels of oil in Indian rupees from Abu Dhabi National Oil Company of Middle East oil producing country UAE. Till now this business of oil was being done in US dollar.
Acceptability of rupees will increase in other countries as well
One effect of trade in rupees between India and United Arab Emirates can be that the acceptability of rupees will increase in other countries as well.
But will this benefit India economically? If India will be able to pay for the purchase of oil in rupees, then it will be very good for India because India has to spend trillions of rupees only on buying dollars to buy oil. If India is able to buy oil in its own currency from all the oil selling countries, it will be very beneficial for it. India is also making such efforts.
Rupee will strengthen at global level
If there is an increase in rupee transactions between India and Dubai, other countries will also accept it more and this will strengthen the rupee at the global level.
India would definitely like that a part of the business which is being done through Dubai should be in dirham or rupee. According to experts, now it will not happen that 100% transactions will be done in rupees or dirhams. It is certain that the acceptability of rupee will increase in the coming times. However, the rupee was already accepted in the markets of Dubai and Abu Dhabi.
In July, Indian Prime Minister Narendra Modi had visited the United Arab Emirates and the two countries had signed an agreement to do business in their respective currencies.
Symbol of strengthening relationship
The commencement of business in rupee and dirham is a symbol of the strengthening relationship between the two countries.
At the same time UAE has also increased investment in India. UAE is seeing investment possibilities in India's Start Up India and Make in India campaigns.
Many sectors of India are also opening up. Gulf countries have a lot of money. India can attract this money towards itself. India has even offered joint production in the defence sector.
UAE is a major trading partner of India. India's big business today is done through UAE, they are like a gateway for India's business.
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