India-UAE Relations: Everything You Need to Know

India and the UAE enjoy strong bonds of friendship based on civilizational links, age-old maritime trade, and vibrant people-to-people contacts. Close geographical proximity, historical links, cultural affinity, natural synergies, shared aspirations, and common challenges provide further impetus to this robust engagement. In this post let us see the important dimensions of India-UAE relations.

India is the UAE’s second-largest trading partner, with the bilateral trade rising to USD 85 billion in 2022-23. In this regard, the leaders of both nations have expressed optimism regarding elevating the bilateral trade to USD 100 billion well ahead of the target year 2030.

India-UAE has shared trade links through the centuries which were dominated by traditional items such as dates, pearls, and fish, but underwent a sharp change after the discovery of oil in UAE (oil exports began from Abu Dhabi in 1962).

With the emergence of the UAE as a unified entity in 1971, exports from India started growing gradually over the years. The real impetus, however, started after Dubai positioned itself as a regional trading hub by the early 1990s and about the same time, the economic liberalization process started in India.

India-UAE Bilateral Relations

• The relation, though occasionally marred by UAE support for Pakistan (on the Kashmir issue), has greatly flourished especially after the accession of H. H. Sheikh Zayed Bin Sultan Al Nahyan, as the ruler of Abu Dhabi in 1966, and subsequently with the creation of UAE federation in 1971.
• It was after 24 years (Indira Gandhi in May 1981), that an Indian PM visited the country (President had visited in November 2010) last year in August 2015. This itself shows the renewed interest Indian foreign establishment is showing in the region; as part of the Link West Policy.
• The bilateral relationship was in the news for the visit of Abu Dhabi crown prince Sheikh Mohammed Bin Zayed Al Nahyan. The relationship has been elevated to the level of a Comprehensive Strategic Partnership Agreement (CEPA), outlining a roadmap for deepening cooperation.

Agreement in international fora

There is increased convergence of ideas based on needs and priorities in different issues of global commons. Collaboration between the two countries happens over issues discussed in the United Nations Framework Convention on Climate Change, the setting up of the International Solar Alliance, and support to the International Renewable Energy Agency, IRENA.

Miscellaneous areas

UAE and India agreed to further strengthen their cooperation in several key areas, including trade and investment, security, counter-terrorism, joint defense production, space cooperation, IT, and electronics. Active engagement between the UAE Space Agency and the Indian Space Research Organization (ISRO) is in effect, which has led to the signing of a Memorandum of Understanding and the establishment of a Joint Working Group for Space Cooperation.

India-UAE Commercial Relations

The age-old maritime trade has evolved into a full-fledged economic and commercial partnership in recent times. Though the trade was valued at $180 million per annum in the 1970s, today around $60 billion worth of goods and services move across the borders, making UAE, India’s third largest trading partner for the year 2014-15 after China and US. Moreover, UAE was the second largest export destination of India with an amount of over US$ 33 billion for the year 2014-15. For UAE, India was the largest trading partner for the year 2013 with an amount of over US$ 36 billion (non-oil trade).

• India’s major exporting items are Petroleum products; precious metals, stones, gems, and jewelry; minerals; food items (cereals, sugar, fruits & vegetables, tea, meat, and seafood); textiles (garments, apparel, synthetic fiber, cotton, yarn); engineering & machinery products and chemicals.
• India’s major importing items are Petroleum and petroleum products; precious metals, stones, gems & jewelry; minerals; chemicals; wood & wood products.

Energy Security

Concerning oil trade, the UAE was the sixth-largest source of crude oil for India in 2015. There is an intention for the Abu Dhabi National Oil Company (ADNOC) and the Indian Strategic Petroleum Reserves Ltd. (ISPRL) to sign a Memorandum of Understanding on the Establishment of a Strategic Petroleum Reserve in India and has agreed to conclude negotiations shortly.

Source of investment

Concerning bilateral investments, total FDI from UAE to India is estimated to be US$ 3.01 billion (Jan. 2015) and ranked as the tenth biggest investor in India. Abu Dhabi Investment Authority (ADIA) announced its plans to invest US$ 2 billion in the Indian Infrastructure sector.

• During PM Modi’s visit last year, the 2 sides agreed to establish a UAE-India Infrastructure Fund, setting an ambitious target of $75 billion to support investment in India’s infrastructure.
• UAE has also appreciated the Indian govt. initiatives like Smart City, Skill India etc. and they are expected to invest in those areas, in addition to fields like oil, renewable energy etc.

India-UAE Security co-operation

A significant aspect of bilateral ties today is the closer convergence on security and counter-terrorism. Notwithstanding a security agreement in place since 2011, progress on counter-terror and maritime security has been slow.

• Recently, in a joint statement, two sides alluded to Pakistan in their joint statement after the prime minister’s visit when calling upon “all states to reject and abandon the use of terrorism against other countries, dismantle terrorism infrastructures and bring perpetrators of terrorism to justice”.
• Further with the rise of the Islamic State, the need for cooperation in security areas and intelligence sharing has achieved higher moral ground.
• Last year, in September, UAE deported to India women suspected of having links to IS. Around 20 Indians have been intercepted while crossing over to the conflict zone.
• The joint production of defense equipment under the Make in India program is another important area of focus.

Cultural Relations

The two nations share historical ties and have maintained regular cultural exchanges both at official and popular levels. India and UAE signed a Cultural Agreement in 1975. The ICCR opened a Culture Centre in Abu Dhabi in 2009.

UAE is home to an Indian expatriate community, 2.6 million strong in numbers, the largest expatriate community in the UAE.

• Professionally qualified personnel constitute about 15 & 20 percent of the community, followed by 20 percent white-collar non-professionals (clerical staff, shop assistants, salesmen, accountants, etc.) and the remainder 65% comprises blue-collar workers.
• There is also a significant business community from India. The annual remittances made by the large Indian community in the UAE amount to over US$15 billion (2013).

India-UAE: Recent developments

2024:

India and UAE signed a Bilateral Investment Treaty (BIT) during Prime Minister of India’s visit BITs between two countries aim to promote and protect foreign private investments in each other’s territories.

• UAE has become the only country with which India has signed both Comprehensive Economic Partnership Agreement  (CEPA) and BIT.
• Earlier, India signed CEPA with Japan and South Korea also and BIT with Belarus.
• CEPA covers negotiation on trade in services and investment, and other areas of economic partnership like Intellectual property rights etc.

Other Key Agreements between India and UAE:

• Inter-governmental Framework Agreement concerning Cooperation for Empowerment and Operation of India-Middle East-Europe (IMEC) Economic Corridor. IMEC calls for a sea-land connectivity project linking India with West Asia and Europe.
• MoU on Development of National Maritime Heritage Complex (NMHC) to build the Maritime Heritage Complex at Lothal, Gujarat.
• Agreement on interlinking of instant payment platforms – UPI (India) and AANI (UAE) and domestic debit/credit cards – RuPay (India) with JAYWAN (UAE). This will facilitate seamless cross-border transactions and enhance universal acceptance of RuPay across the UAE.
• Cooperation Protocol between the National Library and Archives of UAE and National Archives of India for restoration and preservation of archival material.

India-UAE Relations: Areas of Improvement

Grievance Redressal for the migrant Indian workers in UAE:

• There is a renewed vigor to set up such a mechanism on a bilateral level. The Ministry of External Affairs is working to evolve a new arrangement that would make the recruitment process more transparent.
• India and UAE signed a MoU in the field of Manpower Sourcing in December 2006 and a Protocol to streamline the admission of Indian contract workers by way of an electronic contract registration and validation system was signed.
• The Embassy also has the Indian Community Welfare Fund (ICWF) for providing short-term economic assistance (food, shelter, passage expenses, etc.) to destitute workers/housemaids in distress.

India can offer her expertise in sustaining a diverse nation, without much friction, to the West Asian countries, especially since the region is in great turmoil, largely rooted in Sunni-Shia strife.

Since UAE’s oil trade largely flows through the Indian Ocean, our Navy can play a more proactive role in guarding the waters. The recently released Maritime Doctrine of the Indian Navy rightly gives due importance to the Persian Gulf region.

Summary

UAE lights at the heart of the Gulf, a sub-continent hosting no less than 7 million citizens, sending in remittances of $40 billion annually. They also play a crucial role in our energy security. With dipping oil prices, the laws of the economy say the buyers have a better say in the oil trade. Hence, India is in a position to proactively engage, if not dictate, with the federation, to further our interests in the region.

Growing India-UAE economic and commercial relations contribute to the stability and strength of a rapidly diversifying and deepening bilateral relationship between the two countries.

Article by: Jishnu J Raju