India & The UAE Relations: Supporting Stability & Strength in Mutual Economic Corridors
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India & The UAE Relations: Supporting Stability & Strength in Mutual Economic Corridors

Though Indo–UAE cultural, religious and economic relations are age-old, new paths were paved after the accession of H.H. Sheikh Zayed Bin Sultan Al Nahyan as the Ruler of Abu Dhabi in 1966. When UAE Federation was created in 1971, formal diplomatic relations between the two countries were initiated, as the UAE Embassy opened in India in 1972 and the Indian Embassy in the UAE in 1973.

Understanding the political and economic importance of each other, both countries sincerely and consistently worked on improving relations & business, and occasionally gave momentum with visits of top leaders from both sides.

NEW COMPREHENSIVE & STRATEGIC PARTNERSHIP

The initiation of the current golden era took place in 2015 with the historic visit of PM Narendra Modi to the UAE. This led to consolidation of the existing relationship in the old sectors, and exploration of newer areas for taking the bilateral relations to an altogether new level.

Acknowledging each other’s growing importance in the world economy and to create more win–win situations, H.H. Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, visited India in 2016. This took the discussions and agreements to the next level, and the following wide-ranging and far-reaching agreements/MoUs were made/signed carefully considering the bilateral, regional and multilateral concerns: Facilitation of Institutional Investors in Infrastructure, Cooperation in Renewable Energy, Cooperation in Combating Cyber-Crimes, Cultural Exchange, Space, Skill Development, Insurance and Currency swaps.

H.H. Sheikh Mohamed bin Zayed Al Nahyan visited India soon again in 2017 as the Chief Guest for India’s Republic day celebrations. These two visits created an unprecedented momentum, and both countries held several Ministerial-level visits and established institutional mechanisms for sustained action on sector-specific opportunities. Such institutional mechanisms include Joint Commission for Economic and Technical Cooperation (JCM), Strategic Dialogue, Foreign Office Consultations (FOC), High Level Task Force on Investment (HLTFI), Joint Committee on Security Matters (JCSM), Joint Committee on Consular Matters (JCCM), Joint Defense Cooperation Committee (JDCC), Joint Working Group (JWG) on Renewable Energy and Joint Committee on Manpower Resources (JCMR).

In addition to the above mechanisms, a local coordination and grievance redressal mechanism, in the form of a Local Coordination Committee (LCC), has also been put into place, which redresses grievances of the Indian community in the UAE. LCC comprises officers from the Embassy and their UAE counterparts, meets regularly and resolves consular, manpower and community-related issues.

The significance and enhancement of bilateral relations between India and the UAE may be understood by observing that ministerial visits between the two countries have become a regular phenomenon to initiate, get the ball rolling and to finally implement: Mr. Piyush Goyal, Minister of State (Independent Charge) for Power, Coal, New & Renewable Energy and Mines, visited the UAE in January 2017; Dr. Subhash Bhamre, Minister of State for Defense, visited the UAE in February 2017; Mr. Suresh Prabhu, Minister of Railways, visited the UAE in March 2017; Mr. M J Akbar, Minister of State for External Affairs, visited the UAE in April 2017; Ms. Sadhvi Niranjan Jyoti, Minister of State for Food Processing, visited the UAE in August 2017; Mr. M J Akbar, Minister of State for External Affairs, visited the UAE again in October 2017; Mr. N. Chandrababu Naidu visited the UAE in October 2017; and Mr. M J Akbar, Minister of State for External Affairs, visited the UAE a third time in November 2017.

IMPROVING COMMERCIAL RELATIONS

India is the largest trading partner of the UAE, and the UAE is the third-largest – after China and the US – trading partner of India. UAE is also the second-largest export destination of India, and the tenth-biggest investor in India in terms of FDI.

The huge business community from India has played a major role in the economic development of the UAE, and it makes an annual remittance of several billion USD. The contribution of the Indian community in the development and prosperity of the UAE has been duly acknowledged by the UAE Government, and it has also taken steps for developing efficient grievance-redressal mechanisms for the Indian workers in the UAE. The Indian Embassy has developed Guidelines for Indians in the UAE so they avail maximum benefits, a comprehensive online web-based NRI registration system has been developed for Indians resident in the UAE, and an online web-based portal called E-migrate system has also been established for recruitment of Indian workers in the UAE.

HISTORICAL CULTURAL RELATIONS

Historical ties between both countries have led to regular cultural exchanges both at official and people-to-people levels. The Indian Embassy regularly organizes various cultural activities at its own as well as by collaborating with Indian Associations/Cultural Organizations based in the UAE, and in addition to business forums, celebrates International Yoga Day, Gandhi Jayanti, and other events such as unveiling stamps on Ramayana.

The Embassy supports cultural events organized by various expatriate Indian Associations, as the Indian Community in the UAE is the largest expatriate community in the UAE, and their involvement makes a positive impact on the public and cultures of both nations.

FOREIGN POLICY

Narendra Modi’s PM-level visit to the UAE in 2015 took place after a gap of 34 years, as the last Prime Minister to visit the UAE was Indira Gandhi in 1981. However, more important are the follow-up visits and subsequent actions that took place after Narendra Modi’s visit, as since 2015, both countries have created unprecedented momentum of discussions and actions, which has not only achieved a lot on the ground, but has also given a message to the world that both India and the UAE are serious about business growth and stand together powerfully on every matter of concern.

India and the UAE have taken several steps in the recent years to build strong bilateral relations. Some of them include:

• The UAE’s Abu Dhabi National Oil Company (ADNOC) and its partner Saudi Aramco have jointly taken a 50 percent stake in the planned $44 billion refinery-cum-petrochemical complex at Ratnagiri in Maharashtra. Aramco and ADNOC will together own 50 percent of the planned project. The remaining 50 per cent stake is held by India’s state-owned Indian Oil Corporation, Bharat Petroleum Corporation Ltd. and Hindustan Petroleum.

• India has built 5.33 million tonne of emergency storage that is enough to meet its oil needs for 9.5 days, in underground rock caverns in Mangalore and Padur in Karnataka and Visakhapatnam in Andhra Pradesh. It has allowed foreign oil companies to store oil in the storages on condition that the stockpile can be used by New Delhi in case of an emergency.

• India and the UAE have signed a currency swap agreement to boost trade and economic relations. The agreement is expected to reduce the dependency on hard currencies like US dollar and give a push to the local currencies of the two nations. It will also reduce the impact of volatility in exchange rate arising from the dependency on a third currency. India and the UAE bilateral trade stood at $52 billion in 2017, with non-oil trade accounting for $34 billion. India’s FDI into the UAE in 2016-17 was $6.6 billion while the UAE’s investment in India stood at $5.8 billion.

• A Memorandum of Understanding (MoU) has been signed by India and the UAE to explore opportunities for mobilization of up to $75 billion long-term investment in the National Investment and Infrastructure Fund (NIIF). The objective of NIIF is to maximize economic impact mainly through infrastructure development in commercially viable projects, both greenfield and brownfield, including stalled projects, especially in railways, ports, roads, airports and industrial corridors and parks. NIIF will solicit equity participation from strategic anchor partners.

• The UAE has actively worked with India to hand over terrorists and terror masterminds in the past decade. The UAE has also shown its seriousness in its partnership with India against terrorism by showing its preference towards India as a key pillar of its Look East Policy amid growing disenchantment with traditional ally Pakistan. The UAE has even deported Indian-origin sympathizers of the Islamic State (IS), and has voluntarily shared information with India on terror operatives and their networks.

• Extradition of Christian Michel, the alleged middleman in the INR 3,600-crore AgustaWestland VVIP chopper deal has been a diplomatic victory for India. Two other accused in the case were also extradited from the UAE later. This shows how close both countries have come on extradition matters as things that did not happen years were done in one day.

• To improve ties further, for the first time Indian firms have been given a stake in Abu Dhabi’s oil and gas field. This happened when an Oil and Natural Gas Corporation (ONGC)-led consortium of Indian state oil firms was awarded 10% stake in Abu Dhabi’s offshore Lower Zakum Concession for $600 million. The current production of this field is about 400,000 barrels of oil per day and Indian firms’ annual share shall be about 2 million metric tonnes. The field output is set to plateau at 450,000 barrels per day by 2025. This mutually beneficial partnership will create opportunities for ADNOC to increase its market share in the fast-growing Indian market. By delivering high-quality crude to India’s expanding refining industry, it will help India meet its growing energy demand.

• The UAE and Saudi Arabia have decided to make India as a base for food security for the countries and plan to invest in both organic and food processing industries. The Indian government has identified products to be exported from each district, and has divided them into clusters for better results. For example, Nasik has been identified for grapes, Nagpur for oranges and Ratnagiri for mangoes. The UAE and Saudi Arabia showed interest in investing in Indian agriculture after the new export policy removed restrictions on the export of both organic and horticultural products.

• India has achieved a major diplomatic breakthrough with an invitation as a guest of honour to the meeting of the Organization of Islamic Cooperation (OIC) foreign ministers. This fact is more important in the light that Pakistan is a founding member of the OIC, and it tried blocking India’s attendance at OIC. The UAE was the host, and it stood firm behind India. This was a message to the world that voice of moderation was gaining strength among OIC member states, with the UAE leading from the front.

ANALYSIS

The growing relations have been very ambitious, and have a distinct pattern, as analyzed below:

• Bilateral relations between India and the UAE were traditionally based on oil and general import & export of commodities. However, as the UAE decided to aggressively diversify its economy, it reached out to the world. Indians, who comprise the largest expatriate community in the UAE (at over 3.3 million people, it is also one of the largest Indian expatriate community in the world), were quick to reap the benefits of this outreach, and at a balance of trade figure of USD 57 billion, have become the largest trading partner of the UAE.

• Back in 1982 (Indira Gandhi was the last Indian Prime Minister before Narendra Modi who visited the UAE), foreign trade between India and the UAE stood at USD 182 million. By 2016–17, it had reached USD 53 billion. Today, we have explored fresher sectors for trade, such as IT, space technology, tourism, defence manufacturing and renewable energy.

• India’s foreign policy, economy and global reputation have exceptionally improved since 1981, as India has become the fastest-growing major economy in the world. During Indira Gandhi’s time, the world knew India as the friend of Soviet Union. Currently, we have friendly relations with all the countries of the world. This offers us an opportunity to create multidimensional beneficial relations with the UAE.

• India’s image before the world is that of a non-interfering, peaceful country that wants security and stability with its neighbours and all over the world. In addition, India has projected an image that it is willing to take actions and decisions on mutually beneficially opportunities. Its foreign policy appears mature, proactive and dynamic. This sure has attracted the UAE to match the willingness to embrace and explore newer avenues. The two countries are not simply good to each other; they have started acting and implementing together.

• Fight against terrorism has brought both countries together. Defence cooperation and combating extremism and ideologies of hatred have encouraged them to work together and find mutual solutions.

• The growing opportunities and population in India have also increased a demand for jobs. Indians have been seeking job opportunities in the UAE very actively, and this gives an additional commercial opportunity to both the countries, as these Indians are not only helping in the development of the UAE, but these more than 3.3 million people are the largest source of remittances to India – close to USD 15 billion.

• India is the fastest-growing major economy in the world; its markets need investments; it’s the third-largest consumer of oil; on the other hand, the UAE has sovereign funds with a corpus of over a trillion dollars. It makes complete sense that their relations are improving.

• Very different from earlier actions taken to improve bilateral relations, high-level visits from both sides have been followed by a formation of a rigorous structure of committees. This has transformed the relations into a comprehensive strategic partnership, as these committees are working full time for definite results and improvements in relations. These committees meet once or twice a year, and explore how investment opportunities and foreign direct investments between both nations can be increased.

• Increase in investment platforms such as the UAE–India Economic Forum or the Asian Business & Social Forum has helped increase the interactions between various stakeholders, and has also helped take the relations at the next level.

• The Indian diaspora of more than 3.3 million is not passive. With a record 1,000-plus flights a week between India and the UAE, tourism between the two countries has risen immensely. The UAE has significantly eased visiting visa norms for Indians, as anyone carrying a US visa or a Green Card or a UK or EU visa or holding a residency gets a visa on arrival in the UAE. Reciprocating vision and intention, India has set up an e-visa scheme for Emiratis, under which UAE nationals get almost instantaneous visas at 16 airports across India.

• Such visits have also helped both countries offer opportunities in the fields of education, investments, medical treatments, or vacation tourism.

• Prime Minister Narendra Modi has been awarded the Zayed Medal, the highest civil honour of United Arab Emirates (UAE). Though because of the timing, many considered it a pre-poll move to boost his image, it must be understood that the UAE always wanted to recognize PM Modi’s long and concerted efforts towards developing strong ties with the Gulf countries. The award also reflected PM Modi’s special efforts towards boosting relations between the Emiratis and Indians.

• PM Modi’s efforts are more than conspicuous as he has visited 10 West Asian countries since 2014, more than his four predecessors combined. His efforts definitely yielded results as despite large volumes of trade, and several million Indians remitting several billion dollars back home each year from Gulf States, investments didn’t improve for decades.

Matter of factly, things started changing under PM Modi, Indo-UAE relations improved immensely, and gradually but strategically the UAE emerged as a partner in fields such as defence and counter-terrorism.

Because PM Modi has adopted a bold approach in foreign policy not only with our neighbours, but throughout the world, his efforts have also generally improved India’s stance in the Arab world.

India’s strategic demographic and geographic connections with the entire world give it power to amicably resolve several global and international issues.

The growing closeness with the UAE and powerful trade relations with Iran would definitely help India continue its stable relations with the entire Gulf.