In a historic step and a leap forward in strengthening the Indian currency, India has for the first time paid the UAE in rupees for the purchase of crude oil.
This move is a major initiative mainly to promote the use of Indian national currency Rupee in bilateral trade. India is dependent on imports to meet more than 85 percent of its oil needs.
For this he has to pay largely in dollars.
Indian Oil Corporation (IOC) has paid in Indian rupees for the purchase of 1 million barrels of crude oil from Abu Dhabi National Oil Company (ADNOC). Apart from this, some part of the crude oil imported from Russia has also been paid in rupees.
Let us tell you that in July, India had signed an agreement with the United Arab Emirates to make payment in Indian rupees in exchange for the purchase of crude oil from Abu Dhabi National Oil Company.
Indian officials said it was looking for similar deals with other suppliers.
Dollar’s dominance will end
In order to challenge the dollar’s dominance in the global economy, many countries like India are moving away from using the US dollar for trade and instead agreeing to transact in local currencies.
In this series, under the trade agreement, New Delhi is now in talks with oil exporters of UAE and Saudi Arabia to make payment in rupees.
Recent media reports say India is also trying to pay for Russian oil purchases in Indian rupees. However, there is no official confirmation yet.
Why is India doing this?
India’s central bank, the Reserve Bank of India (RBI), has allowed more than a dozen international banks to trade in the rupee in the last three years in its effort to promote the use of the rupee in cross-border payments.
RBI has so far agreed to trade in rupee with 22 countries.
In fact, by doing this, not only will the circulation of Indian currency become global, but internationalization of the rupee will also help in reducing the demand for dollars. With this, the Indian economy will be less affected by the decline in global currency. The tradition of paying for oil purchases in dollars has been going on since the 1970s.
geopolitical reasons
India’s decision to make payments in its national currency comes amid geopolitical and economic tensions, as the US unilaterally banned trade in dollars with Russia and Iran.
Let us tell you that earlier in December, Prime Minister Narendra Modi and Kenyan President William Ruto had directed the concerned agencies in their countries to work towards using the Indian rupee and implementing financing of development projects between the two countries. .