India has signed anagreement with the United Arab Emirates that will allow it tosettle trade in rupees instead of dollars, boosting India’sefforts to cut transaction costs by eliminating dollarconversions.

During a visit by India’s Prime Minister Narendra Modi tothe UAE on Saturday, the two countries also agreed to set up areal-time payment link to facilitate easier cross-border moneytransfers.

The two agreements will enable “seamless cross-bordertransactions and payments, and foster greater economiccooperation”, said a statement from the Reserve Bank of India onSaturday.

India, the world’s third biggest oil importer and consumerand whose central bank last year announced a framework forsettling global trade in rupees, currently pays for UAE oil indollars.

Bilateral trade between the two countries was $84.5 billionin the year from April 2022 to March 2023.

An official with knowledge of the details of the agreementsaid India could make its first rupee payment for UAE oil to AbuDhabi National Oil Co (ADNOC), Reuters reported on Friday.

The Reserve Bank of India said the two central banks agreedto link India’s Unified Payments Interface (UPI) and UAE’sInstant Payment Platform (IPP).

Such arrangements, which are a growing trend in Asia,typically lower the cost of payments.

Modi landed in Abu Dhabi earlier on Saturday for a one-dayvisit and met President Sheikh Mohamed bin Zayed Al Nahyan.