India - UAE Strategic Partnership IAS Target

India - UAE Strategic Partnership

15 Feb 2020

Category : International Relations

Topic: India - UAE Strategic Partnership

UAE-India Liaison during Cold War Period

The relation marred by UAE support for Pakistan (on the Kashmir issue), has flourished 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. After 24 years (Indira Gandhi in May 1981), an Indian PM visited the country in August 2015. This shows the renewed interest in Indian foreign establishment in the region; as a fraction of the Link West Policy.
Today India and UAE share economical, political, and cultural links. A large Indian expatriate community resides and indulges in the UAE in economically productive activities and has played an important role in the evolution of the UAE. Though, many incidents concerning India's expatriate workforce in the UAE, have caused friction in Indo-Emirati relations. Both the countries enjoy historic relations with economic migrant workers of Indian origin residing in the oil-rich Gulf state.
On March 4, 2018, the Indian Coast Guard and Emirati Special Forces collaborated in a successful operation, appealed by UAE Prime Minister, Sheikh Mohammed bin Rashid Al Maktoum, and agreed by Indian Prime Minister Narendra Modi, to seize a yacht carrying Latifa bint Mohammed Al Maktoum (II). On 18 August 2018, Modi explained Sheikh Mohammed's humanitarian support for those affected by the 2018 Kerala floods as "The special ties between governments and people of India and UAE". On August 6, 2019, the UAE backed the decision of the Indian govt to pursue passage of the 2019 Jammu and Kashmir Reorganisation Bill, with the UAE's Ambassador to India stating: "We expect that the changes would improve social justice and security and confidence of the people in the local governance and will encourage further stability and peace."

Why UAE is important for India?

  • UAE is geographically situated at the Strait of Hormuz. This is the world’s most important oil artery and strategically important for India’s energy security.
  • UAE has one of the largest Sovereign Fund in the World. UAE hopes to invest the fund in India in National Infrastructure and Investment Fund (NIIF). India requires fund for its infrastructure sector.
  • Around 3 million Indians live in UAE. This is the biggest Indian Diaspora anywhere in the world. They contribute to the Indian economy through large remittances.
  • India and UAE are both concerned about Radicalization and Terrorism in the region. UAE is a powerful nation in the Middle East and the Muslim World.
  • With US sanctions on Iran, India requires to import crude oil from other sources to meet its energy need. Saudi Arabia and UAE have offered India additional crude oil supplies to meet India’s growing needs. Energy security is important regarding inflation and other financial & economic parameters.
  • War in Yemen for the last 5 years, b/w Houthi rebels (backed by Iran) and government (backed by Saudi and UAE). This has created the largest humanitarian crisis in modern times.

UAE-India trade today is around US$ 60 billion making India the second largest trading partner of UAE. While UAE is India’s third largest trading partner. UAE is the tenth biggest investor in India in terms of FDI.

UAE’s investments in India are focused in five sectors:

  • Power (8.97%)
  • Services Sector (9.44%)
  • Hotel & Tourism (7.29%)
  • Air Transport (Including Air Freight) (7.42%)
  • Construction Development: Townships, Housing, Built-Up Infrastructure and Construction-Development Projects (8.81%)

Institutional Arrangement for Investment

  • National Investment and Infrastructure Fund (NIIF) and Abu Dhabi Investment Authority (ADIA) declared US$ 1 billion investment in NIIF's Master Fund, that will invest in Infrastructure sector in India.

  • To resolve issues relating to UAE Investments in India, a special UAE desk ‘UAE PLUS’ is being established in Invest India. .

  • There are more than 1000 direct flights per week between various destinations of India and the UAE.

  • In the private sector NIIF and DP World have made a US$3 billion fund that will invest in ports and logistics sector in India.

  • In 2015, total FDI from India to UAE amounted to AED 23 billion. Indians were the largest foreign investor in Dubai real estate with investment of AED 20.4 billion in 2016-17.
  • During the visit of EAM in December 2018 both the countries signed an MoU for developmental cooperation in Africa. Several well-known public and private sector Indian companies & banks are also operating in the UAE.

Strategic Cooperation b/w India and UAE

  • Active engagement b/w the Indian Space Research Organization (ISRO) and the UAE Space Agency is in effect, which has led to the signing of a MoU and the establishment of a Joint Working Group for space cooperation

  • Recently Christian Michel, a British National, wanted in Agusta Westland Chopper scam, was extradited to India from Dubai. Deepak Talwar and Rajiv Saxena were also extradited to India from UAE. Rajiv Saxena is a co-accused in AgustaWestland Scam. Deepak Talwar is an activist accused of economic offences in India.

  • India UAE signed a currency swap accord in December last year which will boost trade and economic relationship b/w two countries and reduce India’s dependence on US Dollar.

India-UAE Defence Exercise

India and UAE had their first bilateral Naval exercise in March 2018 named ‘Gulf Star 1’, which took place off the coast of Abu Dhabi.

Challenges for India

  • India and China competition in the region, UAE support for OBOR
  • Diplomatic tensions b/w Qatar on one hand and Saudi Arabia, UAE, and Bahrain on other hand. Qatar has recently left OPEC. Almost seven hundred thousand Indians are living in Qatar.
  • There has been growth in tensions between Iran and other nations in the region, which create volatility in oil supply. India has to balance its relationship b/w arch & rivals
  • Recently, UAE hosted US –Taliban talks for a political solution in Afghanistan. Though the talks have moved to Qatar, this shows UAE still holds influence over the Taliban.