Saudi Arabia May Establish Riyal-rupee Trade With India:
Top officials from Saudi Arabia and India recently discussed establishing a Riyal-Rupee trade between India and Saudi Arabia. India’s Minister of Commerce and Industry, Shri Piyush Goyal, and Saudi Arabia’s Minister of Commerce, Majid bin Abdullah al-Qasabi, held the discussion. Both stakeholders held the meeting during Goyal’s two-day visit to the Kingdom’s capital.
During the visit, Goyal attended the India-Saudi Arabia Strategic Partnership Council. The stakeholders held discussions during this meeting. Saudi Arabia is one of India’s largest trading partners, so the trade discussions are unsurprising. Both countries discussed topics hinged on priority areas like the West Coast refinery and joint crude oil infrastructure development. Saudi Arabia’s position as a major oil exporter to India was the backdrop for these crude oil discussions. However, most importantly, both countries had in-depth discussions on bilateral trade and cross-country investments. More specifically, they discussed the possibility of establishing a framework for the Rupee-Riyal trade.
The Riyal-Rupee agreement
The Riyal-Rupee agreement is intended to phase out the dollar as the primary trade currency and facilitate trade exchanges in the Rupee (India’s official currency) and the Riyal (Saudi Arabia’s official currency). These discussions are not new to Saudi Arabia. Earlier this year, the Kingdom held discussions with China on the possibility of concluding oil sales in the Yuan, China’s official currency.
According to the Indian Ministry of Commerce, both countries engaged in discussions across 41 priority areas. These priority areas included technology, food security, agriculture, energy, and infrastructure. They also discussed collaboration between the Export-Import banks of both countries and the possibility of mutually recognising the commercial standards in both countries.
In addition to the discussion on the Riyal-Rupee trade, India also proposed establishing a Unified Payments Interface (UPI) and Rupay cards in the Saudi Arabian Kingdom. Rupay is India’s global payment card network. The network generally accepts ATMs, e-commerce websites, and POS devices. Rupay currently stands as India’s most recent innovation in the payments system. On the other hand, the UPI is a real-time payment solution created by India’s National Payments Corporation. It is a mobile payment solution that facilitates instant fund transfers across bank accounts. Within a few years of its inception, the UPI has become India’s most commonly used payment solution for online transactions. In August 2022 alone, Indians used the UPI for over 6.57 billion transactions. Given this unprecedented growth, it is unsurprising that India is looking to expand its payment infrastructure to other countries.
The quest to boost bilateral trade relations between India and Saudi Arabia is strongly tied to the increasing trade numbers between the countries. In 2021, both countries engaged in bilateral trade worth over $42 billion. Primary exports from Saudi Arabia to India include crude oil and ammonia. Given these trade numbers, a Riyadh-Rupee deal will help strengthen the currency of both countries. More importantly, it may set the tone for similar deals across the globe.
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