India, UAE push local-currency trade, explore oil reserves and subsea gas pipeline

New Delhi: India and the UAE on Monday agreed to accelerate initiatives for settling trade in local currencies and linking payment systems, while exploring expanded strategic petroleum reserves and a possible subsea gas pipeline to strengthen India’s energy security.

The discussions took place at the 14th India-UAE High Level Joint Task Force on Investments meeting, co-chaired by Commerce and Industry Minister Piyush Goyal and Abu Dhabi Investment Authority Managing Director Sheikh Hamed bin Zayed Al Nahyan.

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The two sides reviewed their central banks’ progress on local-currency settlement, payment and messaging system integration, and central-bank digital currencies. They agreed to support timely implementation of these initiatives, which the Commerce and Industry Ministry said could make bilateral trade and investment more efficient, accessible and resilient.

The measures form part of a wider effort to increase bilateral trade to USD 200 billion by 2032, from USD 101.25 billion in 2025-26.

Speaking after the meeting, Goyal said local-currency trade settlement was gaining traction as exporters became more familiar with its benefits. He described its uptake as being in “double digits”, without specifying the measure.

The arrangement enables businesses to invoice and settle transactions in rupees and UAE dirhams, potentially reducing conversion costs and settlement time.

Energy security draws fresh investment interest

Goyal said the two countries were examining an expansion of strategic petroleum reserves in India amid geopolitical uncertainty, with studies underway and significant additional UAE investment expected.

India is also exploring a larger role for the UAE in supplying LPG and LNG. Separately, a study is assessing the possibility of transporting gas through subsea pipelines for use and storage in India.

The proposals remain under examination and are intended to improve energy resilience and supply security, the minister said.

Working group planned for maritime cooperation

The two countries identified six areas for closer maritime cooperation: ship ownership, modern port development, shipbuilding, ship repair and maintenance, ship recycling, and container manufacturing.

A bilateral working group will be established to advance cooperation across these areas, Goyal said.

The meeting also discussed stronger civil aviation links between India and Abu Dhabi, alongside investment and collaboration opportunities for an aviation and logistics hub at Dholera in Gujarat.

Other potential investment areas included technology and artificial intelligence, space, food security, agricultural innovation and startups. The two sides also reviewed joint projects, including the Food Park project in Gujarat.

UAE investment pipeline expands

Goyal said the UAE had already invested USD 25 billion in India and expressed an intention to invest another USD 25 billion in the near future, with a longer-term objective of taking investments to USD 100 billion.

UAE investors were also exploring opportunities in ports, shipbuilding, space, startups and Indian stock markets, he added.

The task force noted several major transactions and investment proposals, including Emirates NBD’s approximately USD 3 billion acquisition of a majority stake in RBL Bank, International Holding Company’s USD 1 billion investment in Sammaan Capital, and a joint investment intention of USD 11.5 billion for an integrated aluminium complex in Odisha.

It also noted the opening of branches by Mashreq Bank, First Abu Dhabi Bank and Abu Dhabi National Insurance Company in GIFT City.

Invest India’s UAE office is expected to become operational before the end of 2026.

Payment links build on 2023 agreements

The local-currency and payment initiatives build on two agreements signed by the Reserve Bank of India and the Central Bank of the UAE in July 2023.

The proposed Local Currency Settlement System covers current-account transactions and permitted capital-account transactions. It is intended to facilitate rupee-dirham invoicing and payments, support a bilateral foreign exchange market, and promote investment and remittances.

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The central banks also agreed to cooperate on linking India’s Unified Payments Interface with the UAE’s Instant Payment Platform, as well as the RuPay and UAESWITCH card networks. They are exploring links between their financial messaging systems.

India and the UAE implemented their Comprehensive Economic Partnership Agreement in May 2022 and a bilateral investment treaty in August 2024. Their investment task force, established in 2013, promotes economic ties and addresses issues faced by investors from both countries.

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