A privileged strategic partnership, without a gulf
Source: The Hindu
For Prelims: Current events of international importance, India-UAE relations, etc.
For Mains: GS II-Significance of UAE for India, Bilateral, regional and global grouping and agreements involving India or affecting India’s interests.
Highlights of the Article
Prime Minister Narendra Modi is scheduled to pay an official visit to the United Arab Emirates (UAE)
COP28 climate summit
Prime Minister Narendra Modi will also address the World Government Summit on February 14 in Dubai as the ‘Guest of Honour
Context
Prime Minister Narendra Modi is scheduled to pay an official visit to the United Arab Emirates (UAE) from February 13-14, 2024 which will include inaugurating a temple built by the Bochasanwasi Shri Akshar Purushottam Swaminarayan Sanstha in Abu Dhabi. This is Mr. Modi’s seventh visit to the UAE since 2015 and the third in the last eight months. In this short duration, India’s relationship with UAE has evolved into becoming one of the most prominent bilateral relationships for New Delhi. Not only has the UAE become India’s strategic partner but it has also become one of the most important linchpins of India’s engagement in the Gulf region. There is a close rapport between the President of the UAE, Sheikh Mohamed bin Zayed Al Nahyan, and Mr. Modi.
UPSC EXAM NOTES ANALYSIS
1. India and UAE
India and the United Arab Emirates (UAE) share a multifaceted relationship that encompasses economic, political, cultural, and social ties.
Here are some key aspects of the India-UAE relationship:
- Trade: The economic relationship between India and the UAE has been growing steadily. The UAE is one of India's largest trading partners in the Gulf region.
- Investments: Both countries have made significant investments in each other's economies. Indian businesses have a notable presence in the UAE, and the UAE has invested in various sectors in India
- The UAE is home to a large Indian expatriate community. Indian workers and professionals have contributed significantly to the development of the UAE across various sectors such as construction, healthcare, information technology, and finance
- Diplomatic ties between India and the UAE have strengthened over the years. There have been high-level visits and exchanges between leaders of both countries, reflecting the importance they attach to bilateral relations
- The UAE is a significant supplier of oil and gas to India. Both countries have explored opportunities for collaboration in the energy sector, including investments in oil and gas exploration
- In 2015, India and the UAE elevated their relationship to a comprehensive strategic partnership, signifying a deeper commitment to cooperation in various fields
- There are strong cultural and people-to-people ties between India and the UAE. Indian expatriates form a substantial part of the UAE's population, and cultural events, festivals, and celebrations are often shared between the two nations
- India and the UAE have engaged in initiatives to strengthen ties with their respective diaspora communities. This includes cultural events, consular services, and welfare measures for the well-being of Indian expatriates
Recent developments:
- Comprehensive Economic Partnership Agreement (CEPA): Signed in February 2022, CEPA aims to boost bilateral trade and investment to $100 billion within five years.
- Focus on renewable energy: Both countries are collaborating on renewable energy projects, including solar and wind power.
- Defense cooperation: India and the UAE have growing defence cooperation, with joint military exercises and training programs
1.2. Comprehensive Economic Partnership Agreement (CEPA)
A Comprehensive Economic Partnership Agreement (CEPA) is typically a trade agreement between two or more countries that aims to enhance and facilitate economic cooperation. These agreements go beyond traditional free trade agreements by covering a broader range of issues, including trade in goods and services, investment, intellectual property, competition policy, and other areas of economic collaboration
India and the UAE have been working towards a comprehensive economic partnership, covering trade, investment, and other economic aspects.
India and Japan were reported to be negotiating a Comprehensive Economic Partnership Agreement (CEPA). Such an agreement would aim to boost trade and economic ties between the two countries, covering a wide range of areas
1.3.The pillars of ties
- The India-UAE narrative extends beyond religious and strategic collaborations. This unique bond was evident during a grand reception for the UAE President during a road show in Gandhinagar in January, where he served as the chief guest at the 10th Vibrant Gujarat Summit.
- The alignment of perspectives on global climate issues was also apparent during Mr. Modi's presence in Dubai for the COP28 climate summit. The collaboration extended to the launch of the Global Green Credit Initiative.
- Another significant facet is the robust economic partnership. Bilateral trade reached $85 billion in 2022-23, establishing the UAE as India's third-largest trading partner and the second-largest destination for Indian exports.
- Additionally, the UAE stands as the fourth-largest overall investor in India. The Comprehensive Economic Partnership Agreement between India and the UAE, signed in a remarkable 88 days on February 18, 2022, aims to elevate service trade to $115 billion within five years.
- Furthermore, the Indian government, on February 1, 2024, granted approval for the signing and ratification of a bilateral investment treaty with the UAE, promising to substantially enhance bilateral economic engagement, particularly in manufacturing and foreign direct investment.
- Fintech represents another area of shared interest. The RuPay card, integral to India's Digital Public Infrastructure (DPI), has been accepted in the UAE since August 2019, and as of July 2023, the rupee has been acknowledged for transactions at Dubai's airports.
- In August 2023, a rupee-dirham settlement system was operationalized when the Indian Oil Corporation made a rupee payment to the Abu Dhabi National Oil Company for crude oil imports
1.4.Energy security
- The UAE serves as a reliable partner for India in ensuring energy security, distinguishing itself as the sole nation in the region with strategic oil reserves stored in India.
- An agreement between Indian Strategic Petroleum Reserves Ltd (ISPRL) and the Abu Dhabi National Oil Company involves a significant investment of $400 million in the Mangaluru strategic crude oil storage facility. The collaboration extends to defense and security cooperation, as well as the crucial people-to-people ties within the relationship.
- Both nations have demonstrated a willingness to accommodate each other, often making exceptions. Notably, during the UAE-hosted OIC Foreign Ministers' Meeting in 2019, India's External Affairs Minister, the late Sushma Swaraj, was invited as a keynote speaker/guest of honor, despite objections from certain nations, including Pakistan.
- In 2018, India held the distinguished position of the 'Guest of Honour' country at the Abu Dhabi Festival (ADF), the UAE's annual cultural event. During Prime Minister Modi's visit to the UAE in August 2019, he was honored with the UAE's highest civilian accolade, the Order of Zayed. In January 2017, Sheikh Mohammed Bin Zayed Al Nahyan, the Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE armed forces, was the chief guest at Delhi's Republic Day parade.
- Furthermore, the UAE received a special invitation for the G-20 summit in September 2023 during India's G-20 presidency.
- The establishment of the IIT Delhi Abu Dhabi campus and the opening of a consulate in Hyderabad by the UAE in June 2023 further solidify the multifaceted nature of this bilateral relationship
1.5..Strategic ties
Within the region, both countries are in close coordination and a part of a number of important groupings such as the I2U2 or the West Asian Quad comprising India, Israel, the United States and the UAE.
The UAE is also part of the India-Middle East-Europe Economic Corridor (IMEEC) infrastructure project that was signed during the G-20 summit in Delhi. The corridor aims to connect India to Europe across the Arabian peninsula, and is a potential rival to China’s Belt and Road Initiative.
2. India-Middle East-Europe Economic Corridor (IMEEC)
The India-Middle East-Europe Economic Corridor (IMEEC) is a proposed ambitious trade and investment initiative aiming to enhance connectivity and economic integration between three continents: Asia, the Middle East, and Europe.
Key features of IMEEC:
- Two corridors: The IMEEC comprises two separate corridors:
- Eastern Corridor: Connects India to the United Arab Emirates (UAE), Saudi Arabia, Jordan, and Israel.
- Northern Corridor: Links the Middle Eastern countries mentioned above to Greece and Europe.
- Goals:
- Increase trade and investment between the participating countries.
- Improve transportation and logistics infrastructure.
- Enhance energy security and cooperation.
- Create new jobs and economic opportunities.
- Potential benefits:
- Reduced trade costs and transit times: The IMEEC could significantly reduce trade costs and transit times between India and Europe, making trade more efficient and competitive.
- Increased trade and investment: The improved connectivity could lead to increased trade and investment flows between the participating countries.
- Job creation: The project is expected to create millions of new jobs in various sectors, such as infrastructure, logistics, and manufacturing.
- Economic growth: The IMEEC could contribute to the economic growth of all participating countries.
3. Way forward
India has numerous strategic partnership agreements across the globe, but none displays more convergence and mutual respect at all levels than the one with the UAE. There are few major issues of divergence, which is something unique even among the best of friendly nations. While India recognises and values the UAE’s role in the region, the UAE too is cognisant of the ‘global leadership’ role that India is set to acquire. Both countries recognise that this privileged strategic partnership is only set to grow stronger in the years ahead
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