Home From The Sidelines UAE-India Bilateral Relationship: A Symbol of Friendship and Peace

UAE-India Bilateral Relationship: A Symbol of Friendship and Peace

The Prime Minister, Shri Narendra Modi with the Crown Prince of Abu Dhabi, His Highness Sheikh Mohammed bin Zayed Al Nahyan at the one to one meeting, in Abu Dhabi, UAE

By Dr Vinita Singh

The Prime Minister, Shri Narendra Modi with the Crown Prince of Abu Dhabi, His Highness Sheikh Mohammed bin Zayed Al Nahyan at the one to one meeting, in Abu Dhabi, UAECrown Prince of Abu Dhabi Sheikh Mohamed bin Zayed Al Nahyan will be the Chief Guest at the Republic Day parade on January 26, 2017.

During PM Modi’s visit in August last year, the two countries had condemned efforts, including by states, to use religion to justify, support and sponsor terrorism against other countries, or to use terrorism as an instrument of state policy.

Trade is another important component of the bilateral ties as UAE is India’s third largest trading partner after China and the United States. Bilateral trade between UAE and India is around $60 billion.

There are also more than 2.6 million Indians live in the UAE and their annual remittance is estimated to be around $14 billion.

With help of these articles (this one and the other following) we will clearly understand the nature of relationship between the two great nations.

India and United Arab Emirates (UAE) enjoy strong bonds of friendship founded on Millennia old cultural, religious and economic intercourse between the two regions. The history of the contact between the two peninsulas of India and Arabia dates back far in time and people-to-people contacts and barter trade between two regions have existed for centuries, beginning with the barter of pearls for cotton and dry fruits for grains. Indian civilization had ties with the people of Nile valley, Mesopotamia and Dilmun civilizations that flourished in West Asian region. These ancient contacts are clearly visible in the areas like culture, architecture, religion and these were significantly enhanced by those people who migrated and settled down across these civilizations for various purposes including trade and business. Not only this, scholars traversed across the seas to study medicine, culture, sciences, and arts were another source of interaction between the two regions. The business ties have grown stronger out of centuries of exchange of culture, commodities and ideas. The relationship flourished since the creation of the UAE Federation in 1971 and trade has played a major role in the strengthening the bilateral relationship. The trade, which was dominated by traditional items such as dates and fishes, underwent a sharp change after the discovery of oil in UAE and relations have developed considerably over the past decades due to political understanding, rapprochement and common economic interests between the two countries. With the emergence of 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 early 1990s and about the same time, the economic liberalization process started in India. 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. Both sides are striving to further strengthen these ties for mutual benefits.

PM Modi’s visit to the UAE was preceded by significant visits to other GCC states by External Affairs Minister Sushma Swaraj. The Joint Statement between the United Arab Emirates and India is an important articulation of a significant shift in the Arab world’s view of India. The statement is truly comprehensive and wide-ranging. It talks of historic ties of “commerce, culture and kinship”, drawing attention to the unique history of Arab interaction with Indian communities of the west coast, from Gujarat to Kerala. The joint statement, outlining closer government- to-government (G-2-G) relations, draws attention to the vibrant business- to-business (B-2-B) and people-to-people (P-2-P) relationships and commits the UAE to a sharp increase in its investment in India. What is striking to an observer of India- West Asia relations is the assertion of not just a “shared” past but of shared challenges in the present and a shared future. It then proceeds to state: “A shared endeavour to address these challenges, based on common ideals and convergent interests, is vital for the future of the two countries and their region.” The statement expresses the hope that: “Proximity, history, cultural affinity, strong links between people, natural synergies, shared aspirations and common challenges create boundless potential for a natural strategic partnership between India and UAE.”

The UAE and India are making tremendous efforts to scale their economic, investment and trade cooperation to new heights, given the fact that India is today emerging as one of the world’s fastest growing economies. Forecasts predict that the South Asian country will rise as the world’s third largest economy by 2030 after the United States and China. India is one of the developing Asian economies that has maintained its economic position despite the global financial crisis, as a result of the large fiscal stimulus offered by its policies and its pursuit of a policy to reduce interest rates on monetary policy tools, as well as the rise in its industrial production and its decreasing reliance on exports. Statistics issued by the World Trade Organisation in its 2015 World Trade report indicated that India ranked 19th in the world in terms of exports, worth $317 billion, and accounting for 1.7 percent of the global exports. It also ranked 12th in the world with imports worth $460 billion, accounting for 2.4 percent of the world’s imports. The UAE economy attracts investment due to many reasons, such as the economic and political stability in the country, its status as the gateway to regional and international markets, the abundant investment opportunities it offers, as well as its excellent geographical location, readily available infrastructure and ease of investment procedures in various sectors. 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. Both sides are striving to further strengthen these ties for mutual benefits. India-UAE trade, valued at $180 million per annum in the 1970s, is today around $50 billion making UAE, India’s third largest trading partner for the year after China and US.

The two countries had already agreed to make bilateral investments in the petroleum sector and also take up joint projects in third country. UAE has initiated a Mars mission for 2020 and India has agreed to assist that country in the project. In 2014, India and the UAE signed an MoU to enhance cooperation in renewable energy, especially solar and wind power. The Small and Medium-sized Enterprises sector (SMEs) is also a promising area for joint cooperation. The UAE has expressed interest in tapping India’s expertise in SMEs to create a vibrant industrial base in the UAE, which could also be of benefit to Indian enterprises. There are over 1050 direct weekly flights between the UAE and India, a number that shows the strength of people-to-people and economic ties between the two countries. Flights between the UAE and India take the lion’s share of air traffic between the Arabian Gulf and India. There are around 500 flights per week between various destinations in India and UAE, shared by Emirates, Etihad, Air Arabia, Kingfisher, Jet Airways, Air India and Air India Express. Out of this three UAE national airlines (Emirates, Etihad and Air Arabia) operate more than 300 flights per week which represents approximately 64% of total flights operated in this sector.

For India’s energy security, UAE is an important country as it gets 9.4 percent of total crude requirement from that country. The UAE also ranked 11th in the world in terms of foreign direct investment in India. The total sum of the UAE’s investments in India is estimated to be about $10 billion, including $4.03 billion as foreign direct investment.

India’s exports to the UAE are well diversified with a large basket. India’s major export items to the UAE are: Petroleum Products, Precious Metals, Stones, Gems & Jewellery, Minerals, Food Items (Cereals, Sugar, Fruits & Vegetables, Tea, Meat, and Seafood), Textiles (Garments, Apparel, Synthetic fibre, Cotton, Yarn) and Engineering & Machinery Products and Chemicals. India’s major import items from the UAE are: Petroleum and Petroleum Products, Precious Metals, Stones, Gems & Jewellery, Minerals, Chemicals, Wood & Wood Products.

Many leading Indian companies and banks have an important presence in Dubai. For example, L&T, HCL Infosystems, Nagarjuna Construction Company Limited, Hinduja Group, Danube, Sobha Group, Indian Oil Corporation, Reliance Industries, Essar Group, Bank of Baroda, State Bank of India, IDBI Bank, Union Bank of India, Oriental Bank of Commerce, Punjab National Bank, Indusind Bank, Bank of India, Indian Overseas Bank, HDFC, ICICI, Axis Bank, Andhra Bank, Canara Bank, Corporation Bank and others. RAKFTZ is home to a large number of Indian companies operating in diverse sectors including Pioneer Cement ($105 million investment), JBF RAK Polyester Chips and Films ($100 million), Eternity Technologies of Al Dobowi Group manufacturing industrial batteries ($55 million), Ashok Leyland Bus/Truck Assembly ($50 million), Mahindra Emirates Vehicle Armoury ($25 million), Dabur India Herbal Products($25 million), RAK Steel Products ($25 million), Bosco Aluminium Products ($10 million), and others.

There are a number of joint ventures and investments undertaken by UAE companies in India. EMAAR, a real estate company of Dubai Government, is active in the real estate sector having already set up a major township, an international convention centre and a golf course in Hyderabad. Dubai Ports World is now operating 5 major Ports in India at Nhava Sheva, Navi Mumbai, Chennai, Mundra, etc, following its acquisition of the P&O of U.K. DP World constructed the International Container Transshipment Terminal (ICTT) at Vallarpadam in Kochi (Kerala). Abu Dhabi’s National Petroleum Construction Company(NPCC), has won a major engineering and construction contract to build offshore platforms from India’s Oil and Natural Gas Corporation(ONGC). Ras al-Khaimah (RAK) signed a MoU for a JV with Govt. of A.P for setting up a one million tonne per annum Alumina plant and a 250,000 tonne aluminium smelter. Abu Dhabi National Energy Company (TAQA) has presence in India, through a company called “ST-CMS Electric Company Pvt Ltd.”, operating 250 MW lignite- fired power plant in Neyveli, Tamil Nadu. The Abu Dhabi Investment Authority (ADIA), which is a sovereign fund owned by the Abu Dhabi Government has around $700 billion in investible funds. Most of the investments made by ADIA in India are in portfolio investments. It owns 12 percent stake in the Indian Company Infrastructure Leasing & Financial Services (IL&FS). Dubai-based contractor Drake and Scull International has won $82.8 million contract to boost the power transmission network at Uttarakhand. The firm is building a new 400kV Double Circuit power transmission line which will be fed by a huge hydropower project known as the Uttarakhand Power Sector Investment-Project.

The increasing importance of the UAE for India is beyond doubt. The region is important to India for political, economic, security reasons. Thus, it is important for India to engage UAE more effectively and constructively. While India’s economic interaction with the region reflects positive trend, in other areas also the cooperation has been found increasing. In recent years, there has been great success in the interaction in the political and security areas in dealing with the region, but it needs to be further invigorated. As an emerging power, India should engage with UAE moving beyond the traditional trade and energy sectors. India’s growing stature and ambition to play an important role in the world politics calls for playing a proactive role in the Gulf. India needs to strengthen bilateral ties with all the Gulf countries as they share mutual concerns, perceptions and strategies about major issues like terrorism, regional security etc. Stepping away from religious extremism and accepting pluralism and multi- culturalism as the defining principles of a modern state is the only way forward for each of the countries of Asia — from West to East. India’s appeal to Asia as a whole is built on these foundational principles of its Constitution.