Boosting Trade and Empowering Indian Professionals: UAE-India Currency Agreements Embrace Bilateral Transactions and Tourism Facilitation
Amidst the visit of Indian Prime Minister Narendra Modi, the UAE and India have signed landmark agreements that garnered a warm reception from Indian businessmen and professionals in the UAE.
These agreements aim to promote the use of local currencies in bilateral trade, streamline card switch systems, and integrate payment messaging systems, all of which will have a positive impact on both tourists and residents.
The UAE and India share robust trade and tourism ties, with bilateral trade already reaching an impressive $84.5 billion. Moreover, Indian tourists hold a significant position as the top visitors to the UAE, while also standing as the largest investors in the local property markets.
The UAE’s population of over 9.6 million includes a substantial Indian diaspora, accounting for 3.7 million individuals.
Notably, the agreements enable Indian importers to open Letters of Credit (LC) in Indian rupees instead of relying on US dollars. This move promises to bolster the balance of payments and strengthen the South Asian currency.
Additionally, traders will now have the opportunity to earn consistent margins by avoiding the fluctuations associated with foreign exchange. With the elimination of the need for Form 15CA and 15CB, traders are urged to promptly embrace the Local Currency Settlement (LCS) mechanism.
Harikishan Rankawat, Chairman of The Institute of Chartered Accountants of India (ICAI) – Dubai Chapter, and Managing Partner of RNG Auditors, emphasized the significance of these developments: “The adoption of the Local Currency Settlement mechanism will not only enhance trade but also bring stability to the market by eliminating foreign exchange uncertainties. This is a remarkable step forward for Indian businesses and professionals in the UAE.”