India pays in rupee for the crude oil purchased from UAE for first-time ever
Updated: Dec 26th, 2023
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In a first, India made its first-ever payment in rupees for crude oil purchased from the United Arab Emirates (UAE), signalling a cogent strategic push to promote the local currency globally.
India, the world’s third-largest energy consumer, imports 87.3% of its crude oil, as per the 2022–23 report by the Petroleum Planning and Analysis Cell (PPAC).
In July of this year, India signed an agreement with the UAE for a rupee settlement, and soon after that, the Indian Oil Corporation (IOC) made payments for the purchase of a million barrels of crude oil from Abu Dhabi National Oil Company (ADNOC) in Indian rupees.
Some of the Russian oil imports, too, have been settled in rupees.
For several decades, the default payment currency for the import of crude oil has been the US dollar, and the currency has traditionally had liquidity as well as lower hedging costs.
However, officials said that the Indian rupee’s internationalisation is a process and there are no targets.
However, in July 2022, the Reserve Bank of India (RBI) allowed all exports and imports to be invoiced in Indian rupees. This was informed by the union minister of state for finance, Dr Bhagwat Kisanrao Karad, in a written reply to a question in Lok Sabha in Feb 2023.
