India and UAE Speed Up Rupee-Dirham Trade and UPI Payment Links
India and the UAE agreed to speed up work on settling their trade in their own currencies (Indian rupee and UAE dirham) and on linking their payment and financial messaging systems.
The decision came at the 14th meeting of the India-UAE High Level Joint Task Force on Investments. This forum was set up in 2013 to promote investment and solve problems faced by investors of both countries.
Both sides reviewed work by their central banks on local-currency settlement, linking payment systems, and central bank digital currencies (CBDCs, the digital form of a country's official money).
The plan includes linking India's Unified Payments Interface (UPI) with the UAE's Instant Payment Platform, linking card networks RuPay (India) and UAESWITCH (UAE), and exploring a link between India's Structured Financial Messaging System and the UAE's messaging system.
India-UAE trade reached $101.25 billion in 2025-26 (non-oil trade: $76.2 billion). The two countries target $200 billion by 2032. They also reviewed the Comprehensive Economic Partnership Agreement (CEPA), in force since May 2022.
Recent investments noted include Emirates NBD's about $3 billion majority stake in RBL Bank, a $1 billion investment in Sammaan Capital, and a joint investment intent of $11.5 billion for an aluminium complex in Odisha. An Invest India office in the UAE is expected to open before the end of 2026.
Local Currency Settlement (LCS) Mechanism and Internationalisation of the Rupee
Local Currency Settlement (LCS) means two countries pay each other for trade in their own currencies instead of in the US dollar. Under the India-UAE system, an Indian importer can pay in rupees and a UAE exporter can receive dirhams, without first converting both into dollars. This saves conversion costs and time. It is part of India's larger goal of making the rupee more widely used outside India, which is called internationalisation of the rupee.
The Joint Task Force reviewed how far the central banks have gone with the rupee-dirham settlement and agreed to push for timely implementation. More trade in local currencies would lower costs for exporters and importers and deepen the rupee-dirham currency market.
India-UAE Comprehensive Economic Partnership Agreement (CEPA)
The India-UAE CEPA is a trade deal that removes or cuts the import taxes (customs duties) that India and the UAE charge on each other's goods. It also opens up trade in services and supports investment. A CEPA is broader than a simple goods-only trade deal because it also covers services, investment and common rules. It was concluded in record time and became a model for India's later trade deals.
The Joint Task Force reviewed how the CEPA is being implemented. Local-currency settlement and linked payment systems are meant to make CEPA trade cheaper and faster, helping the two countries move towards the $200 billion goal.
Unified Payments Interface (UPI)
The Unified Payments Interface, or UPI, is an Indian system that lets you send money from one bank account to another instantly, using just a mobile phone. You do not need to know the other person's account number or IFSC code. You only need their UPI ID, their mobile number or a QR code. It works 24 hours a day, every day of the year, and the money moves in seconds.
India and the UAE are now working to link UPI with the UAE's Instant Payment Platform and RuPay with UAESWITCH. Once linked, people and businesses can send money between the two countries instantly and cheaply. This matters because the UAE is home to one of the largest Indian communities abroad, who send large sums home.
- Meeting: 14th India-UAE High Level Joint Task Force on Investments (set up in 2013)
- India-UAE trade 2025-26: $101.25 billion; non-oil trade: $76.2 billion
- Bilateral trade target: $200 billion by 2032
- India-UAE CEPA in force: 1 May 2022
- India-UAE Bilateral Investment Treaty in force: August 2024
- Two India-UAE MoUs (local currency and payment systems) signed: July 2023
- Payment links planned: UPI with UAE Instant Payment Platform; RuPay with UAESWITCH; India's Structured Financial Messaging System with the UAE's messaging system
- Emirates NBD: about $3 billion for a majority stake in RBL Bank
- Aluminium complex in Odisha: joint investment intent of $11.5 billion
- Invest India office in the UAE: expected before the end of 2026