India, UAE sign pacts on use of local currencies in cross-border transactions, IIT campus in Abu Dhabi

The Ministry of External Affairs official spokesperson Arindam Bagchi said the visit set “a new landmark in bilateral ties”. He said that the discussions touched upon a broad range of areas of bilateral cooperation, including trade and investment, fintech, energy, renewables, climate action, higher education and people-to-people ties.

Prime Minister Narendra Modi being seen off by Crown Prince of Abu Dhabi Sheikh Khaled bin Mohamed bin Zayed Al Nahyan as he concludes his visit to UAE, in Abu Dhabi, Saturday, July 15, 2023. (PTI Photo)

The pacts signed included a Memorandum of Understanding (MoU) for the establishment of a framework to promote the use of local currencies (INR-AED) for cross-border transactions by Governors of the respective Central Banks. Another MoU on interlinking payment and messaging systems by Governors of the respective Central Banks was also inked. The third pact was an MoU for planning to establish an IIT-Delhi campus in Abu Dhabi.

About the two pacts on cross-border transactions, Prime Minister Modi said, “This is a very important aspect of India-UAE cooperation. It paves the way for enhanced economic collaboration and will make international financial interactions simpler.”

The joint statement said that the leaders discussed that developing the Local Currency Settlement System between the two countries to settle bilateral trade is a “reflection of mutual confidence”. Moreover, it underlines the robustness of the economies in both countries and enhances the economic engagement between the UAE and India, it said.

“The leaders expressed their interest in strengthening cooperation in the payment systems area by enabling integration between their instant payment systems to process cross-border transactions between the UAE and India more efficiently. Such cooperation will also include the mutual acceptance of domestic card schemes by interlinking national card switches. Integration between these systems will enhance access to payment services for the benefit of the citizens and residents of the two countries,” the joint statement said.

Prime Minister Narendra Modi being accorded a ceremonial welcome upon his arrival in Abu Dhabi, Saturday, July 15, 2023. UAE President Sheikh Mohamed bin Zayed Al Nahyan is also seen. (PTI Photo)

Foreign Secretary Vinay Kwatra explained the context of these pacts. “As you would be aware, India and the UAE, under the guidance of the two leaders, had signed the Comprehensive Economic Partnership agreement last year. And since the signing of that important strategic landmark agreement between the two countries, the trade and economic partnership and engagement has grown significantly between the two countries. The visit this time puts together another pillar of that strategic economic partnership in important ways,” he said.

India-UAE trade rose to USD 85 billion in 2022, making the UAE India’s third-largest trading partner for 2022-23 and India’s second-largest export destination. India is the UAE’s second largest trading partner. In February 2022, India became the first country with which the UAE signed a Comprehensive Economic Partnership Agreement. Bilateral trade has increased by approximately 15% since the entry into force of the pact on May 1, 2022.

RBI Governor Shaktikanta Das signed the pacts with his counterpart, the Governor of the Central Bank of UAE, Khaled Mohamed Balama.

Under the MoU on ‘Payments and Messaging Systems’, the two central banks agreed to cooperate on (a) linking their Fast Payment Systems (FPSs) – Unified Payments Interface (UPI) of India with Instant Payment Platform (IPP) of UAE; (b) linking the respective Card Switches (RuPay switch and UAESWITCH); and (c) exploring the linking of payments messaging systems i.e., Structured Financial Messaging System (SFMS) of India with the messaging system in the UAE.

On the education pact, Modi said this marks a “significant stride in our educational internationalisation and is testament to India’s innovation prowess”.

Prime Minister Narendra Modi and UAE Crown Prince Khaled bin Mohamed bin Zayed Al Nahyan during a meeting, in Abu Dhabi, Saturday, July 15, 2023. (PTI Photo)

“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,” he said.

According to the joint statement, the two leaders expressed their endorsement and approval that IIT Delhi – Abu Dhabi will become operational by January 2024 by offering a Master’s programme in Energy Transition and Sustainability. Other Bachelor, Master’s and Ph.D. Level programmes are expected to be offered from September 2024, in addition to establishing research centres in the fields of sustainable energy, climate studies, computing, and data sciences.

On the issues of extremism and terrorism, the joint statement said that the leaders reaffirmed their “joint commitment to the fight against extremism and terrorism, including cross-border terrorism, in all forms, at both the regional and international levels”.

“They agreed to further deepen their bilateral cooperation in the fight against terrorism, terrorist financing, and extremism. In this context, they emphasized the importance of promoting the values of peace, moderation, coexistence, and tolerance among peoples and stressed the need for all forms of extremism, hate speech, discrimination, and incitement to be renounced,” it said.

The joint statement also said that the two leaders resolved to further enhance bilateral partnership in the energy field, both in oil, gas, and renewable energy. “Both sides will take forward their cooperation in Green Hydrogen, solar energy and grid connectivity. Both sides also agreed to increase investment across the energy spectrum, including in India’s Strategic Petroleum Reserve Programme,” it said.

They also acknowledged the joint work on issues of climate change, particularly during India’s presidency of the G20 and the UAE’s presidency of COP28. “They resolved to work together to make COP28 a success for all,” the statement said, as Prime Minister Modi also met Sultan Al Jaber, the President-designate of COP28.

The two sides later issued a separate joint statement on climate change.

Prime Minister Narendra Modi being welcomed by UAE President Sheikh Mohamed bin Zayed Al Nahyan at the Qasr Al Watan Presidential Palace, in Abu Dhabi, Saturday, July 15, 2023. (PTI Photo)

On investments, the leaders reiterated their resolve to further strengthen investment ties between the two countries. “In this context, they appreciated the efforts of the bilateral High-Level Joint Task Force of Investments. They acknowledged that the UAE became the fourth largest investor in India in 2022-2023, compared to the seventh in 2021-2022. They appreciated the plan of Abu Dhabi Investment Authority (ADIA) to set up a presence in Gujarat International Finance Tec-City (GIFT City), a financial free zone in Gujarat, in the next few months. This will further facilitate investment opportunities for the UAE in India,” it said.

Modi, who arrived in Abu Dhabi on Saturday afternoon, was welcomed by Crown Prince of Abu Dhabi, Sheikh Khaled bin Mohamed bin Zayed Al Nahyan at the airport. A ceremonial welcome and Guard of honour were accorded to the Prime Minister.

Modi said he was looking forward to the participation of UAE’s ruler Sheikh Mohamed bin Zayed Al Nahyan in the G20 Leaders’ Summit on September 9-10 in New Delhi. The UAE is one of the guest countries for this year’s G20 summit.

Later in the day, he took the flight back to India.