Relationship between India, UAE embodies symbiotic exchange of resources, knowledge, cultural capital

By Dr Maheep
New Delhi [India], May 16 : The relationship between India and the United Arab Emirates (UAE) embodies a symbiotic exchange of resources, knowledge, and cultural capital. Historically, the connections between India and the UAE have been deeply rooted in shared cultural heritage and maritime trade, with antecedents dating back centuries.
The contemporary manifestation of these ties serves as a witness to the resiliency of international cooperation and diplomacy, fundamentally transforming the geopolitics of the region. In recent times, the alliance has exhibited signs of a strategic pivot, marked by a confluence of interests in regional security, energy cooperation, and the digital economy, reflecting the shared aspirations and visions of both nations.
India, which holds the presidency of the G20 this year, is duly following the convention of inviting non-member countries and international organisations to the Summit. This year, the countries invited are Egypt, Mauritius, Nigeria, Netherlands, Spain, Singapore, Oman, the United Arab Emirates (UAE) and Bangladesh. UAE enjoys an extraordinarily warm relationship with India.
The UAE is today India's third-largest trading partner and second-largest export market. The volume of trade between them is expected to from USD 60 billion in 2019-2020 to USD 100 billion in the next few years. Indian External Affairs Minister, S Jaishankar, observed in December 2022, that more Indian citizens live in the UAE than in any other country abroad. Earlier, in February 2022, India and the UAE signed UAE-India Comprehensive Economic Partnership Agreement (CEPA). The two countries have known and engaged with each other for a long time, but the quality of their ties has seen a distinct improvement since 2016, and With CEPA, it has scaled an unprecedented height. When Indian Prime Minister, Narendra Modi, went to the UAE in 2015, it was a visit by an Indian premier after more than four decades. The visit has since produced a veritable transformation in India-UAE relations.
In recent times, India and the United Arab Emirates (UAE) have engaged in discussions on a range of themes of both strategic and cultural significance. This includes an agreement to establish a USD 75 billion fund for infrastructure development, negotiations to fill India's strategic oil reserves at Mangalore with the assistance of the UAE, the inclusion of Hindi as the third official language in the Abu Dhabi Judicial Department (ADJD), construction of the first Hindu Temple in Abu Dhabi, the trend of reverse migration, the flash floods in Kerala, the cooperation in the aftermath of the Pulwama tragedy, and the exploration of ways to maximize the potential of the strategic partnership framework, which holds the potential to substantially alter the nature of the India-UAE relationship.
India and the UAE signed a Comprehensive Economic Partnership Agreement (CEPA) on February 18, 2022, during the virtual summit attended by the President of the UAE, HH Sheikh Mohamed bin Zayed Al Nahyan and Indian Prime Minister Narendra Modi. The India-UAE CEPA is India's first bilateral trade agreement in the Middle East & North Africa (MENA) region and the first bilateral trade accord concluded by the UAE. It is a wide-ranging agreement, covering all aspects of India's economic engagement with the UAE, including Trade, Investments, Digital Trade Government Procurement, IPR Healthcare, etc.
The stellar rise in overall growth in bilateral trade is a reflection of the early gains flowing from the agreement. In a meeting celebrating the first anniversary of the milestone organised by FICCI, the Embassy of India and Dubai Chambers in Dubai, Thani Al Zeyoudi, UAE Minister of State for Foreign Trade, spoke about the opportunities and advantages offered by CEPA while Indian Ambassador Sunjay Sudhir observed that the business from both India and UAE have already started leveraging the duty waivers and enhanced market access offered under the CEPA.
On the occasion of the first anniversary of the implementation of the India-United Arab Emirates Comprehensive Economic Partnership Agreement (CEPA), the Commerce Secretary, Shri Sunil Barthwal, offered his congratulations to the people of India and the UAE on this milestone. He also spoke about CEPA's role as a driving force behind the growth of bilateral trade between India and the UAE over the past year. The CEPA, which was signed on February 18, 2022, during a virtual summit between the Prime Minister of India and the President of the UAE, entered into force on May 1, 2022.
The Commerce Secretary highlighted the ongoing efforts between the two nations to further improve the ease of doing business. Representatives from the industry noted their experiences in leveraging the CEPA to achieve significant growth in their respective sectors. Over the past year, the CEPA has had a significant impact on bilateral trade between India and the UAE. The bilateral trade reached historic highs in the fiscal year 2022- 2023, with trade increasing from USD 72.9 billion (Apr 21-Mar 2022) to $84.5 billion (Apr 22-Mar 2023), representing a year-on-year increase of 16 per cent.
During the CEPA implementation period (May 22 to Mar 23), bilateral trade increased from USD 67.5 billion (May 21-Mar 2022) to USD 76.9 billion (May 22-Mar 2023), marking a year-on-year increase of 14 per cent. Exports from India to the UAE have also reached multi-year highs. During the April-March period, Indian exports to the UAE increased from USD 28 billion to USD 31.3 billion, representing an increase of USD 3.3 billion or 11.8 per cent year-on-year growth in percentage terms. In comparison, India's global exports grew by 5.3 per cent during the same period.
During the CEPA implementation period (May 22-March 23), India's exports to the UAE increased by 8.5 per cent year-on-year, growing from USD 26.2 billion (May 21-March 22) to USD 28.5 billion (May 22-March 23). Sectors including mineral fuels, electrical machinery, gems and jewellery, automobiles, essential oils and perfumes, other machinery, cereals, coffee, tea, spices, other agricultural products, and chemical products have experienced significant growth in exports due to the CEPA. Utilization of the India-UAE CEPA has been steadily increasing, with the number of preferential certificates of origin issued under the agreement growing from 415 in May 2022 to 8440 in March 2023.
In the goods domain, the UAE eliminated duties on 97.4 per cent of its tariff lines corresponding to 99 per cent of imports from India, while India has achieved immediate duty elimination on over 80 per cent of its tariff lines corresponding to 90 per cent of India's exports in value terms. In the services domain, both nations have taken broader and deeper commitments across all sectors and modes of supply. Out of the 160 services subsectors, India has offered 100 subsectors to the UAE and the UAE has offered 111 subsectors to India. Given the significant increase in bilateral trade, particularly in exports of Indian goods and services, the CEPA is expected to have had a positive impact on other key macroeconomic variables such as GDP and employment.
The UAE Ministry of Economy hosts a special event to celebrate the first anniversary of the UAE-India Comprehensive Economic Partnership Agreement (CEPA) on May 8, as part of the Annual Investment Meeting. The event, titled "CEPA Beyond Trade," brings together industry leaders from both nations to reflect on the achievements of the partnership over the past year and delve into their collaborative efforts in various sectors, including food, fashion, and the arts. In addition to insightful panel discussions, the event also features a street food festival, a fashion display, and live entertainment, showcasing the rich cultural diversity of both nations.
Dr. Thani Al Zeyoudi, the Minister of Climate Change and Environment of the UAE, sees the CEPA as a turning point in bilateral relations and a model for international collaboration in the post-COVID-19 era. The event is supported by prominent organizations such as the Abu Dhabi National Oil Company (ADNOC), the Annual Investment Meeting, the Lulu Group, The Indian People's Forum (IPF), and Texmas.
The Annual Investment Meeting is a globally recognized investment platform that aims to drive economic growth by fostering opportunities for economic productivity and expansion. It has established itself as a leading investment platform in the Middle East, promoting investment opportunities and developing economic relationships among nations while addressing global challenges that impact economic growth. The Government of Kerala has been announced as a Gold Sponsor for this year's meeting.
In addition to the CEPA, India and the UAE are also part of a mini-lateral group, known as the I2U2, along with Israel and the United States, which aims to increase joint investments in various sectors such as water, food security, transportation, energy, health, and space. The emergence of I2U2 is testimony to the ripple effect of the increasing warmth in the India-UAE relationship. Unencumbered by the complications of decision-making and institutional constraints of larger organisations, mini-laterals (involving three to nine countries) offer greater flexibility, select membership, informality, and a goal-oriented focus. This shift towards mini-laterals is prompted by the growing importance of geoeconomics, which is shaping the way countries collaborate and form alliances to further their economic interests. By focusing on shared economic interests, member countries are able to forge trust, overcome political differences, and evolve an expansive agenda for cooperation that combines geopolitics and geo-economics.
The I2U2 group works together in solar and wind energy, coordinating efforts to fight climate change and rail transport infrastructure. One of the main objectives of the group is to improve food security following the Russia-Ukraine war, which had been impeding Ukraine's efforts to export food grains. The four countries also discuss trade and investment and cultural and educational ties and explore private sector involvement. The latest high-level meeting to accelerate bilateral economic cooperation and engagements under the India, Israel, US and UAE grouping (I2U2) was held in Abu Dhabi on February 21-22, 2023 to discuss investment opportunities and "pressing issues including food insecurity and energy crisis."
In a joint statement released in July 2022, the premiers of the four countries observed that they intend to mobilize private sector capital and expertise to modernize infrastructure, advance low-carbon development pathways for industries, improve public health and access to vaccines, advance physical connectivity between countries in the Middle East region, and promote the development of critical emerging and green technologies while ensuring near- and long-term food and energy security.
The UAE - home to the International Renewable Energy Agency (IRENA) and host of COP28 in 2023 - has promised to invest USD USD 2 billion to develop integrated food parks across India. The latter will be equipped with state-of-the-art climate-smart technologies to employ renewable energy sources, reduce food waste and spoilage and conserve fresh water. India is expected to make available suitable land for the project and will coordinate farmers' integration into the food parks. The I2U2 Group will facilitate a hybrid renewable energy project in India's Gujarat State. It will generate 300 megawatts (MW) of wind and solar power, and be complemented by a battery energy storage system. UAE-based companies are keen to serve as critical knowledge and investment partners for the project. Such projects can potentially make India a global hub for alternate supply chains in the renewable energy sector.
The two countries are currently discussing a rupee settlement. The details have been shared between the two sides and a technical team is currently examining the various aspects. UAE's ambassador to India Abdulnasser Alshaali said in December 2022 that it is just a typical currency swap settlement between two countries with their local currencies. There are talks also about possible defence cooperation though it is in the early stages yet. Jammu and Kashmir figure prominently in the expanding profile of business relations between the two countries. During the recent visit of Manoj Sinha to the Gulf countries, the Lieutenant Governor of Jammu and Kashmir, six major Page 6 of 6 Memorandums of Understanding were signed, bringing forth promises of investment of INR 45000 crores.
Over the last five decades, India has figured out that her relationships with the UAE do not rest on business and trade alone, there are many common factors that naturally bind the two countries together - from their recognition of the need to develop sustainable energy to their rejection of any link between religion and terrorism, their mutual respect for the principles of national sovereignty, social security of Indian expatriates in the Arab Gulf region and their focus on the knowledge economy. The trajectory of the relationship, meanwhile, has traversed both the crests of hope and troughs of lost time and opportunities. Dr Maheep is an Expert in India's Foreign Affairs with a Specialisation in the Arab Gulf States and Islam. He has a keen interest in the Political Economy of India.
Dr Maheep is an Expert of India's Foreign Affairs with Specialisation in Arab Gulf States and Islam. He has a keen interest in the Political Economy of India.