India-UAE CEPA Review: Advancing Local Currency Settlement and Non-Oil Trade
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India and the UAE recently reviewed the progress of their Comprehensive Economic Partnership Agreement (CEPA), focusing on the Local Currency Settlement System (LCSS) and the removal of non-tariff barriers to boost bilateral non-oil trade.
The 2nd Joint Committee Meeting (JCM) under the India-UAE Comprehensive Economic Partnership Agreement (CEPA) marks a pivotal moment in the deepening of the 'Comprehensive Strategic Partnership' between the two nations. Since the CEPA's implementation in May 2022, bilateral non-oil trade has witnessed a significant surge, underscoring the agreement's effectiveness in liberalizing market access and fostering economic synergy.
A central theme of the review was the operationalization of the Local Currency Settlement System (LCSS). By facilitating trade in the Indian Rupee (INR) and the UAE Dirham (AED), both nations aim to reduce reliance on third-party currencies. This mechanism is expected to lower transaction costs, mitigate exchange rate volatility, and streamline the settlement process for businesses. For India, this aligns with the broader strategic objective of internationalizing the Rupee and strengthening its financial footprint in the West Asian region.
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