## Bilateral trade agreement between UAE and India On [July 11, 2022](https://rbi.org.in/Scripts/NotificationUser.aspx?Id=12358&Mode=0), RBI announced an additional arrangement for invoicing, payment, and settlement of exports / imports in INR through the facility of SRVA accounts. 1. SRVA accounts are special Rupee Vostro accounts held by foreign banks/overseas correspondents with AD Category-I banks for settlement of trade transactions. 1. [FAQs](https://www.rbi.org.in/commonman/English/Scripts/FAQs.aspx?Id=3373) - Special Rupee Vostro Account (SRVA) since [July 11, 2022](https://rbi.org.in/Scripts/NotificationUser.aspx?Id=12358&Mode=0). 2. In 2023, India and UAE also entered into the [[Agreements between UAE and India|agreement]] to settle trade in rupees. 2. **2023** 1. July 15, 2023 - RBI and the Central Bank of UAE (CBUAE) signed two [[RBI_Press Release_230715_RBI and UAE_MoU.pdf|MoUs]] in Abu Dhabi for 1. establishing a Framework to Promote the Use of Local Currencies viz. the Indian rupee (INR) and the UAE Dirham (AED) for cross-border transactions; and 2. cooperation for interlinking their payment and messaging systems. 2. The MoU established the framework for the use of local currencies for transactions between India and UAE. 3. <span style="background-color: #ffffcc">The aim here was to put in place a Local Currency Settlement System (LCSS) to promote the use of INR and AED bilaterally.</span> 4. The MoU covers all current account transactions and permitted capital account transactions. 5. **Benefits:** 1. Creation of the LCSS would enable exporters and importers to invoice and pay in their respective domestic currencies. 2. Using local currencies (like INR–AED) avoids cross-currency legs such as INR to USD to AED, thereby reducing conversion costs, settlement time, exchange rate volatility risks (other than the volatility in the Rupee and the local currency), including for remittances from Indians residing in UAE. 1. This arrangement would also promote investments and remittances between the two countries. 2. All this would enable the development of an INR-AED foreign exchange market. 7. The LCSS further strengthened the currency swap agreement already signed in 2018. ## Bilateral Currency Swaps with UAE Indian Rupee (INR)/UAE Dirham (AED) Bilateral Currency Swap Arrangement between RBI and Central Bank of the UAE 1. [Feb 12, 2016](RBI_Press%20Release_20160212_RBI%20and%20Central%20Bank%20of%20UAE%20sign%20MoU%20to%20consider%20Currency%20Swap%20Agreement.pdf) - A Memorandum of Understanding (MoU) was signed between the RBI and the Central Bank of UAE in February 2016 to consider entering into a currency swap agreement subject to the concurrence of the respective governments. 2. Nov 30, 2018 - Subsequently, a currency swap agreement between India and UAE was signed to enable trade in local currencies, for 2 billion dirhams or 35 billion INR, roughly around USD 0.496 billion ## Other Agreements with UAE **1. Supervisory Cooperation and Exchange of Supervisory Information** 1. [Oct 19, 2015](RBI_Press%20Release_20151019_RBI%20signs%20MoU%20on%20“Supervisory%20Cooperation%20and%20Exchange%20of%20Supervisory%20Information”%20with%20the%20Central%20Bank%20of%20UAE.pdf) - RBI signed the Memorandum of Understanding (MoU) on “Supervisory Cooperation and Exchange of Supervisory Information” with the Central Bank of UAE, United Arab Emirates, to promote greater co-operation and share supervisory information. 1. **Financial products and services** 1. [Mar 15, 2023](RBI_Press%20Release_20230315_Reserve%20Bank%20of%20India%20and%20Central%20Bank%20of%20the%20UAE%20sign%20MoU%20to%20promote%20innovation%20in%20financial%20products%20and%20services.pdf) - The Reserve Bank of India (RBI) and the Central Bank of the United Arab Emirates (CBUAE) signed a Memorandum of Understanding (MoU) today in Abu Dhabi, to enhance cooperation and jointly enable innovation in financial products and services. 2. [Jul 15, 2023](RBI_Press%20Release_20230715_Reserve%20Bank%20of%20India%20and%20Central%20Bank%20of%20the%20UAE%20sign%20two%20MoUs.pdf) - Reserve Bank of India and Central Bank of the UAE signed an MoU on cooperation for interlinking their payment and messaging systems, along with another MoU to establish a Framework to Promote the Use of Local Currencies for Cross-border ## Related Notes 1. [[Trade Payments]] 1. [[Bilateral Trade Payments between India and Iran]] 2. [Agreements between UAE and India](Agreements%20between%20UAE%20and%20India.md) 3. [Deposits and Accounts](Deposits%20and%20Accounts.md) 2. Currency Swaps 1. [[SAARC Currency Swap Arrangement]] 2. [[Bilateral Swap Arrangement with Japan|Bilateral Currency Swap Arrangement with Japan]] 3. [Sri Lanka's BoP Crisis](Sri%20Lanka's%20BoP%20Crisis%20-%202022.md) 3. [[Borrowing from IMF]] 4. [[Internationalisation of INR OPEN]] 1. [Role of Dollar](Role%20of%20Dollar.md) ## References 1. RBI. (July 11, 2022). International Trade Settlement in Indian Rupees (INR) \[Press Release\]. [Link](https://rbi.org.in/Scripts/NotificationUser.aspx?Id=12358&Mode=0) 2. RBI. International Trade Settlement in Indian Rupees (INR) \[FAQs\]. [Link](https://www.rbi.org.in/commonman/English/Scripts/FAQs.aspx?Id=3373) 3. Embassy of India, Abu Dhabi. (n.d.). Bilateral agreements. [Link](https://www.indembassyuae.gov.in/page.php?id=bilateral-agreements) 4.