Tuesday, 25 June 2024
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EconomyIndia

India pays the UAE in rupees for the first time to buy crude oil

  • India is attempting to strategically push the local currency throughout the world by making its first payment.
  • India has taken a broad approach and upholding its commitments to other countries.
  • Oil exporters have been hesitant to accept the rupee because of high transaction costs.

India is attempting to strategically push the local currency throughout the world by making its first payment for crude oil imported from the United Arab Emirates (UAE) in rupees.

This move is in line with the July 11, 2022, move by the Reserve Bank of India, which permits exporters to receive payments in local currency and importers to pay in rupees.

Crude oil

India has taken a broad approach, purchasing from suppliers who can offer products at a lower cost, expanding its supply chain, and upholding its commitments to other countries.

India, which imports more than 85% of its oil needs, has taken a multipronged approach, concentrating on procuring from the most affordable suppliers, diversifying its supply chain, and upholding its international commitments.

Oil exporters have been hesitant to accept the rupee because of high transaction costs and concerns about capital repatriation, even though non-oil trade settlements with particular nations have been successful.

Payments for crude oil can be paid in Indian rupees, the oil ministry has stressed, provided suppliers follow the rules. Due to suppliers’ concerns about high processing costs and fund repatriation, there hasn’t been much interest from abroad in using the Indian rupee for payments.

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