The India-UAE rupee-dirham deal signed during Prime Minister Narendra Modi’s visit to Abu Dhabi is bilateral, and does not carry any agenda to “de-dollarise” the global economy, said the United Arab Emirate’s Ambassador to India. Speaking to The Hindu after Mr. Modi returned from his meeting with UAE President Mohammad bin Zayed al Nahyan on Saturday, Ambassador Abdulnasser Alshaali said that the deal would significantly ease the path for trade between India and the UAE by lowering transaction costs and making it easier to convert the currency. When asked about whether India would avail the agreement to resolve its problems in payments to Russia in Dirhams, he said the agreement was not “multilateral” or about “third countries”..
“This is a purely bilateral matter between the UAE and India. We have decided that we want to make sure that there are more options for traders, exporters, importers to set up their trade. And it’s basically up to them how they want it to work,” Mr. Alshaali said in an interview here.
UAE-India trade has increased by approximately 15% since the implementation of the Comprehensive Economic Partnership Agreement between them in May 2022. Bilateral trade including oil purchases has reached about $85 billion, of which UAE exports to India make up about $50 billion. The UAE Ambassador said that technical teams had discussed how to ensure that the bilateral deficit against India and a surfeit of Indian rupees did not become an issue, as it had become for India’s trade with Russia for oil payments and defence purchases, as well as for Iran.
“The idea is not to per se increase trade right away, but to actually have the option to set it up in local currencies, to have the right mechanism in place to be able to do that,” said Dr. Alshaali, who holds a Ph.D in Economics and was previously the Assistant Minister for Economic and Trade Affairs within the UAE Foreign Ministry. He added, however, that the conversation about what would be the “currency of the future” was changing, referring to discussions at both the recent SCO summit this month and upcoming BRICS summit next month about promoting “national currency” payments instead of dollars within the groupings. The UAE has become a dialogue partner of the SCO, and has applied to be a member of the BRICS group of emerging economies. It also joined the BRICS-founded “New Development Bank” (NDB) this year.
The UAE President is expected to visit Delhi in September to attend the G20 summit where UAE is a special invitee. In addition, Mr. Modi has been invited to attend the CoP28 Climate change conference in Dubai in November, and the Ambassador said the number of visits between the two leaders had helped “speed up the momentum” of bilateral ties, especially in trade.
Air Service Agreement
However, he pointed out that unless India agreed to revise the Air Service Agreement (ASA) between the two countries, for which negotiations had reached an impasse at present, it would be difficult to accommodate the new demands for travel between the two countries.
“The UAE wants to be as flexible as possible in our visa regime for Indians, for tourists, traders and businessmen especially after the new trade agreements. But if we issue so many visas, we need more flights to carry passengers, or prices will skyrocket further,” Mr. Alshaali said.
Talks between the UAE and India over revising the ASA signed in 2014 have hit an impasse over the past few years, as the Civil Aviation Ministry is reluctant to increase the number of seats between Dubai, and other UAE cities to about 15 Indian cities, as it could take away business from Indian airlines. As a result, data from travel portals show an increase in airfares of 45-50% to Dubai from New Delhi, Bengaluru, and Kochi as compared with pre-COVID fares.
“We want to have this conversation [on the ASA], we want to make travel easier for Indians. But we are waiting to see if someone [Indian government] wants to have this conversation with us,” he added, stressing that it was the Indian traveller who suffered the most with the rise in ticket prices.
On regional issues, Mr. Alshaali said that UAE had good relations with India as a strategic partner and Pakistan as a bilateral partner, but did not know of any current efforts by the UAE government to mediate between the two. When asked about the UAE’s decision to attend the Srinagar G20 meeting in May this year, while other members of the Organisation for Islamic Cooperation such as Turkey, Saudi Arabia, and Egypt did not, the Ambassador said that the UAE was committed to supporting the Indian G20 presidency.
“What matters to us is we want to make sure that India as a host of the G20 can see and count on the UAE as a true strategic partner, which is why it’s not just about us being present [at the G20 meeting] in Jammu and Kashmir, but as also taking part in the other meetings, not only at the official level, but at the ministerial level,” Mr. Alshaali said, adding that he was confident that India would find a way to forge a joint communique at the end of the G20 summit, despite current differences over the Ukraine war.
(With inputs from Jagriti Chandra)