PM visits United Arab Emirates (UAE)

Note4Students

From UPSC perspective, the following things are important :

Prelims level : NA

Mains level : India-UAE Relations

PM Modi expressed gratitude to President of the United Arab Emirates Sheikh Mohamed bin Zayed (MBZ) al Nahyan for taking great care of 3.5 million Indian community in the UAE during the pandemic.

India- UAE Relations: A backgrounder

  • The relation has greatly flourished especially after the accession of H. H. Sheikh Zayed Bin Sultan Al Nahyan, as the ruler of Abu Dhabi in 1966.
  • The greater push has been achieved in bilateral relations when the visit of Indian PM’s to the UAE in August 2015.
  • It marked the beginning of a new strategic partnership between the two countries.
  • Further, the Crown Prince was invited in January 2017 as the chief guest at India’s Republic Day celebrations.
  • In 2017 the two sides signed the agreement on Comprehensive Strategic Partnership (CSP).

Significance of ties

  • Indian Diaspora in UAE: Around 3 million Indians are living harmoniously in the UAE.
  • UAE – A willing partner: As India seeks to enhance economic engagement and deepen security cooperation with the Gulf, it finds a willing partner in the UAE.
  • India being a natural partner: UAE’s ‘Look East’ find partners for its economic growth and with security concerns emanating from turmoil in West Asia and growing threat from terrorism.
  • Investments: UAE has a special place due to its business-friendly atmosphere, willingness to invest in the Indian economy.
  • India’s West Asia policy: The UAE occupies a key place in India’s West Asia policy. The high-level visit from both sides has given a new impetus to this partnership.

Why UAE is tilting toward India?

  • Turmoil in West Asia: Geopolitical conditions as Iran is threatening continuously to close the Strait of Hormuz in case there is a conflict with Saudi Arabia or US.
  • Disappointment from Pakistan: UAE saw Pakistan as a partner and incorporated a deep economic and security relationship with it. But in the present day, Pakistan does not seem to be of much help to UAE.
  • India as a market: India is an important destination for oil and energy purchase. UAE also recognizes exhaustible nature of its fossil fuel reserves.
  • Returns on investment: UAE’s massive sovereign wealth funds can act as a great resource in the development of infrastructure in India.
  • Addressing Terrorism: There has been a rising convergence between India and UAE on the terror issue and both the countries talked of the need to combat terror groups without any discrimination.
  • Lack of regional consensus: Countries like Syria, Iraq, Libya and Yemen are suffering from violent conflicts. The Gulf Cooperation Council (GCC) has not produced expected results.

Economic Significance of the UAE

  • UAE, due to its strategic location, has emerged as an important economic centre in the world.
  • In recent years, the UAE, through its ‘Vision 2021’, has sought to diversify its economy and reduce its dependency on oil.
  • Although the UAE has diversified its economy, the hydrocarbon sector remains very important followed by services and manufacturing.
  • Within services, financial services, wholesale and retail trade, and real estate and business services are the main contributors.

India-UAE trade and investment ties

  • India is UAE’s third largest trade partner after China and the United States.
  • The UAE accounts for 8 percent of India’s oil imports and was fifth largest supplier of crude oil to India.
  • The aim is to boost bilateral merchandise trade to above U.S.$100 billion and services trade to U.S.$15 billion in five years.
  • As we are witnessing a big turnaround in manufacturing, the UAE would be an attractive export market for Indian electronics, automobiles, and other engineering products.
  • The UAE’s investment in India is estimated to be around U.S.$11.67 billion, which makes it the ninth biggest investor in India.

Advanced technology and the knowledge economy

(1) Technology

  • In 2018, India and UAE signed a MoU to generate an estimated $20 billion in the span of a decade.
  • The Emirates have stepped up efforts to invest in the development of the knowledge economy by expanding the “golden visa”.
  • Space is a new arena in which India and the UAE have collaborated through the work of the UAE Space Agency (UAESA) and the Indian Space Research Organization (ISRO).
  • Space cooperation between India and the UAE gained quick momentum during PM Modi’s visit to the Emirates in 2015.
  • The two countries are likely to work together on Emirates’ ‘Red planet Mission’.

(2) Security and Defence Cooperation

  • Another significant pillar of India-UAE ties is reflected in their growing cooperation in security and defense sector.
  • With the spread of radicalism in Gulf and South Asia, India looks to enhance security cooperation with UAE to counter terrorist threats and combat radicalization.
  • Desert Eagle II’, a ten day air combat exercise, was held between the air forces of India and UAE.

Way Forward

(1) Needs to ensure the execution of the investment projects with the required expertise

  • Potential areas to enhance bilateral trade include defence trade, food and agricultural products as well as automobiles.
  • Indian companies with expertise in renewable energy sector can invest in UAE.
  • In defence sector, there is a need to further enhance cooperation through joint training programmes.

(2) Manifold Benefits of India-UAE Trade Agreements

  • With India’s newfound strength in exports, a trade agreement with an important country such as the UAE would help sustain the growth momentum.
  • As we are witnessing a big turnaround in manufacturing, the UAE would be an attractive export market for Indian electronics, automobiles, and other engineering products.

(3) Improving the relations with the GCC

  • As part of the GCC, the UAE has strong economic ties with Saudi Arabia, Kuwait, Bahrain, and Oman and shares a common market and customs union with these nations.
  • This FTA with the UAE will pave the way for India to enter the UAE’s strategic location, and have relatively easy access to the Africa market and its various trade partners.
  • This can help India to become a part of that supply chain especially in handlooms, handicrafts, textiles and pharma.

(4) Solving the issue of UAE’s Non-Tariff Barriers (NTBs)

  • The UAE tariff structure is bound with the GCC (applied average tariff rate is 5%), therefore, the scope of addressing Non-Tariff Barriers (NTBs) becomes very important.
  • The reflection of NTBs can be seen through Non-Tariff Measures (NTMs) mostly covered by Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT).

 

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