India made its first-ever payment in rupees for crude oil purchased from the United Arab Emirates

India, the third-largest energy user in the world, made the first-ever payment for crude oil bought from the United Arab Emirates (UAE) in rupees, indicating a potential strategic move to support the local currency internationally. This initiative is a part of India's larger plans to diversify its sources of oil, reduce transaction costs, and make the rupee a competitive trade settlement currency. This programme is in line with the July 11, 2022, announcement by the Reserve Bank of India, which permits importers to make payments in rupees and exporters to receive payments in local currency.

Authorities have emphasised that there are no set goals at this time and that internationalisation is a continuous process. After formalising a rupee settlement deal with the United Arab Emirates in July, the Indian Oil Corporation (IOC) paid the Abu Dhabi National Oil Company (Adnoc) in Indian rupees for one million barrels of crude oil. Also, some rupee payments have been made for Russian oil purchases.

India has chosen a diversified strategy, prioritising purchasing from the most cost-effective suppliers, diversifying supply sources, and complying to international responsibilities, given that over 85% of its oil needs are met by imports. The country's strategy worked well, saving billions of dollars amid the spike in Russian oil imports. India nonetheless intends to investigate commercial payments in rupees as opposed to dollars in order to expedite transactions by doing away with currency exchanges.