(Photo Credit: AP)
The United Arab Emirates is in early discussions with India to trade non-oil commodities in Indian rupees, Emirati Minister for Foreign Trade Thani bin Ahmed al-Zeyoudi told Reuters on 18 January in Davos.
The action would build upon a 2022 deal that sought to double non-oil commerce between the two nations to $100 billion by 2027.
Trading in Indian rupees would also represent a significant shift away from the US dollar, which now rules the world’s commodities markets and commerce with countries bordering the Persian Gulf.
According to the UAE’s Minister, China also considered settling non-oil trade in local currencies that do not include the dollar, though he told Reuters that conversations have not yet advanced.
Despite the fact that the majority of trade in the Gulf is done in dollars, China and India are both moving further toward using local currencies due to cheaper transaction costs.
Indian companies are switching from the US dollar to Asian currencies to pay for Russian coal imports, according to documents reviewed by Reuters on August 2022.
Steelmakers and cement manufacturers in India have been using the UAE dirham, Hong Kong dollar, Chinese yuan, and euro to pay for Russian coal in recent months
Last July, Russia became India’s third-largest coal supplier after the South Asian giant dumped the greenback to secure deals, with imports surging to a record 2.06 million tons.
Meanwhile, on 7 July 2022, the Russian logistics company, RZD Logistics, announced that it completed its first transportation of goods via container trains from Russia to India through the eastern branch of the International North-South Transport Corridor (INSTC).
This first transportation of goods through the INSTC was made in coordination with the Iranian shipping firm, the Islamic Republic of Iran Shipping Line Group (IRISL).
The INSTC, which links the Indian Ocean and the Persian Gulf to the Caspian Sea via Iran, is a 7,200-kilometer-long, major international shipping route for Indo-Russian trade.
According to Iranian officials, cargo transport from Russia to India through the INSTC will boost Iran’s transit revenue, ease its battle against the effects of US sanctions, and boost its economy.