India UAE ink mous for financial payments, education
Prime Minister of India arrived in Abu Dhabi to a warm welcome by Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi. Thus cementing the bilateral relations between the two countries.
PM Modi then inspected the ceremonial Guard of Honour with Sheikh Mohamed at the magnificent Qasr Al Watan. The two leaders held wide-ranging talks on bilateral and global issues. The India-UAE relationship is rapidly transforming in line with the Vision Statement unveiled by the two leaders during their virtual summit in February 2022.
During the visit, the two leaders witnessed the exchange of three historic Memoranda of Understanding (MoU), including the exchange of MoU on bilateral cooperation on interlinking the payment and messaging systems between the Reserve Bank of India and the Central Bank of the UAE.
One MoU was exchanged for the establishment of a campus of IIT-Delhi in Abu Dhabi between the Indian Ministry of Education, UAE’s Abu Dhabi Department of Education and Knowledge and the Indian Institute of Technology, Delhi (IIT).
This is the first ever IIT to be set up in the Middle East/North Africa (MENA) region. This is a landmark project which reflects the vision of the leaders and it will be a tribute to the people of India and the UAE who are the backbone of the historic relationship.
The idea behind setting up of IIT campus in Abu Dhabi is to bring the academic excellence of IITs to the wide international community. The campus aspires to be a truly global campus which will also benefit the large Indian diaspora in the UAE and the region.
“This marks a significant stride in our educational internationalisation and is testament to India’s innovation prowess. Education is the bond that unites us, it’s the spark that ignites innovation. Together, we will leverage this power for mutual prosperity and global betterment,” Prime Minister Narendra Modi tweeted.
Second MoU on Local Currency Settlement (LCS) System was signed between the Reserve Bank of India and the Central Bank of the United Arab Emirates enabling the use of Indian Rupee (INR) and UAE Dirham (AED) for Cross-border Transactions.
This is India’s first-ever LCS and is expected to reduce transaction costs and time and increase reliance on local currencies. This will further add to the preferential terms accruing from Comprehensive Economic Partnership Agreement (CEPA).
The traders can choose the payment currency based on mutual agreement. Further, the surplus balance in local currencies can be used for investing in local currency assets like corporate bonds, Government securities, equity markets etc. LCS is likely to have a transformational impact not only on the bilateral economic relationship but in larger economic engagements across the world.
Under the newly implemented LCS system, the first transaction involved the sale of 25 Kg of Gold from a leading UAE gold exporter invoiced at approx 12.84 crore Rupees. Gold, gems and jewellery are the second most traded commodities between India and the UAE. Last year, the two-way trade between India and UAE was worth INR 170000 Crores which was about 42 per cent of total non-oil trade between the two countries.
The third MoU will facilitate the integration Unified Payments Interface (UPI) of India and the Instant Payments Platform (IPP) of the UAE. It will also facilitate interlinking card switches of the two countries – RuPay switch and UAESWITCH to facilitate the mutual acceptance of their domestic cards and processing of card transactions directly without relying on any other network.
Very importantly, the Central Bank of the UAE could benefit from the Structured Financial Messaging System (SFMS) developed by RBI. These linkages are also expected to further facilitate the LCS technique in the long run by providing an alternate payment-switching system.
Prime Minister Narendra Modi concluded his three-day visit to France and the United Arab Emirates.
