INDIA-UAE RELATIONSHIP

Why in the news?

Recently, India and the UAE signed a Bilateral Investment Treaty (BIT), during an official visit of Prime Minister of India to UAE.

More on the news

• The BIT is expected to further promote investments in both countries.
• It will offer proper settlement of disputes through arbitration and thereby, among other things, encourage domestic manufacturing and reduce import dependence.
• As India moves towards achieving US$5trillion economy target and UAE focussing on diversification and liberalization program to reduce reliance on oil economy, both countries converge as partners in progress in various sectors.
  • Experts believe that this BIT is a step towards this direction itself. 

About India-UAE Relations

• India-UAE diplomatic relations began in 1972. The year 2015 marked the beginning of a new strategic partnership between the two nations.
• It led to the signing of Comprehensive Economic Partnership Agreement in 2022 with a target to boost bilateral trade to $100 billion.

Areas of Convergence 

• Economic & Commercial: The UAE’s investment in India is estimated to be around US$ 20-21 billions of which US$15.5 billion is in the form of FDI while the remaining is portfolio investment between April 2000-March 2023.
  • Fintech cooperation- Agreement on interlinking of the instant payment platforms - UPI (India) and AANI (UAE), Agreement on inter-linking domestic debit/credit cards - RuPay (India) with JAYWAN (UAE)
  • Energy Security of India: UAE is an important supplier of crude, LNG and LPG to Indian market.
• Multilateral Cooperation: Both countries are part of various platforms such as BRICS, I2U2 (India-Israel-UAE-USA) and UFI (UAE-France-India) Trilateral.
• Diaspora and people to people relations: UAE has over 3.5 million Indian diasporas constituting roughly ~35 per cent of the country’s population.
  • PM inaugurated Bochasanwasi Akshar Purushottam Swaminarayan Sanstha (BAPS) Hindu temple in Abu Dhabi.
• Furthering regional Connectivity through India-Middle East Economic Corridor (IMEC) which will connect India, European Union, France, Germany, Italy, Saudi Arabia, UAE and US.
• Education: There are many International Indian schools in the UAE following CBSE and Kerala Board curricula, and an overseas campus of IIT Delhi is being established in Abu Dhabi.
• Defence Cooperation: Steered through a Joint Defence Cooperation Committee, with the signing of Agreement on Defence Cooperation.
  • Both countries also participate in International Defence Exhibition and Conference (IDEX) and the Naval Defence and Maritime Security Exhibition (NAVDEX) and in military exercise such as Desert Flag, Desert Cyclone.
• Space Cooperation: ISRO and the UAE Space Agency have signed agreement for exploration and use of outer space for peaceful purposes and is an important element of the I2U2 cooperation as well.

Challenges in India-UAE relationship

• Deteriorating regional peace in region due to the on-going conflict in Israel-Palestine and the Red Sea attacks. It may impact IMEC.
• Rights of emigrant labourers in UAE due to Kafala system granting disproportionate power to employers over immigrant labourers leading to human rights violations. This often leads to passport confiscation, delayed wages, and poor living conditions
• Trade and Market access barriers in various sectors such as agrochemicals along with biased qualification clauses (in favour of Middle East, Europe or developed countries) affects exports from India.

Way Forward

• Welfare of Migrant Workers: Both countries should find solutions so as to ensure rights and welfare of migrant workers in UAE focused at reforming Kafala System.
• Further deepening of defence ties: This will aid to counter Chinese influence in the Indian Ocean region. 2+2 dialogue on the lines of USA, Japan can be explored between India-UAE.
• Minimization of Non trade barriers: So that issues related to India's exports in various sectors can be addressed.

Conclusion

The relations with UAE are important for India just not in bilateral spheres but also in India's Extended Neighbourhood and Look West Policy of India. The fast-paced improvement in India-UAE relations show that the relation is bright and full of hope and is on the right track.