Context:
India and the United Arab Emirates (UAE) recently conducted bilateral discussions aimed at deepening their Comprehensive Strategic Partnership. During the talks, the crown prince of Abu Dhabi was hosted by India’s Prime Minister at Hyderabad House in New Delhi. The meeting resulted in the signing of multiple agreements focused on expanding energy ties between the two nations, further solidifying their collaborative efforts.
Relevance:
GS II: International Relations
Dimensions of the Article:
- Key Agreements Signed During the Visit
- Key Aspects of India-UAE Relations
- Challenges in India-UAE Relations
Key Agreements Signed During the Visit:
- Civil Nuclear Cooperation:
- India and UAE signed a Memorandum of Understanding (MoU) for civil nuclear cooperation.
- This involves collaboration between the Nuclear Power Corporation of India Limited (NPCIL) and the Emirates Nuclear Energy Company (ENEC) for the operation and maintenance of the Barakah Nuclear Power Plant, which is located in Al Dhafra, within the Emirate of Abu Dhabi and is the Arab world’s first nuclear power plant.
- Energy Agreements:
- LNG Supply: An MoU was signed for the long-term supply of Liquefied Natural Gas (LNG) between UAE and India, enhancing energy cooperation between the two nations.
- Strategic Petroleum Reserve (SPR): Another MoU was signed with India Strategic Petroleum Reserve Limited (ISPRL) to ensure a stable supply of petroleum, safeguarding against geopolitical uncertainties or supply disruptions.
- Food Security:
- An MoU was signed with the Government of Gujarat focusing on the development of food parks in India. This initiative is part of the broader I2U2 grouping, which includes India, the UAE, and other partners, aimed at enhancing food security in the regions of Gujarat and Madhya Pradesh through agricultural development and food park initiatives.
Key Aspects of India-UAE Relations:
- Strategic Partnerships:
- The relationship is characterized by a ‘comprehensive strategic partnership’ and a ‘strategic security dialogue’, emphasizing strong political and strategic ties.
- The UAE is India’s third-largest trading partner.
- Economic Agreements:
- The Comprehensive Economic Partnership Agreement (CEPA) has notably increased bilateral trade from USD 72.9 billion to USD 84.5 billion within a year, marking a 16% increase.
- UAE is a significant source of foreign direct investment (FDI), ranking as the fourth largest investor in India during FY23, with a substantial increase in FDI received.
- Energy Security:
- UAE is a critical oil supplier and plays a significant role in India’s Strategic Petroleum Reserve (SPR), ensuring energy security.
- Financial Integration:
- Initiatives like India’s RuPay card and the Unified Payments Interface (UPI) being introduced in the UAE enhance financial collaboration.
- Both nations have implemented a Local Currency Settlement (LCS) system to facilitate trade and financial transactions.
- Defense and Security Cooperation:
- Enhanced cooperation in defense and security, including counter-terrorism and joint military exercises like Exercise Desert Cyclone.
- UAE shows a keen interest in Indian defense products, including BrahMos missiles and Tejas fighter jets.
- Space Collaboration:
- An MoU between ISRO and the UAE Space Agency promotes cooperation in the exploration and utilization of outer space for peaceful purposes.
- Multilateral Engagements:
- The UAE’s participation in the I2U2 grouping (India-Israel-UAE-US) and the India-Middle East-Europe Economic Corridor (IMEC) underscores its role in broader regional and global multilateral frameworks.
- Cultural and Social Links:
- The large Indian diaspora in the UAE acts as a bridge enhancing cultural and social ties.
- Notable cultural initiatives include the inauguration of the first Hindu temple in Abu Dhabi, symbolizing shared values of tolerance and coexistence.
- Healthcare Cooperation:
- During the COVID-19 pandemic, the collaboration was particularly evident as both countries supported each other with medical supplies and vaccines.
Challenges in India-UAE Relations:
- Trade Diversification Challenges: Although the Comprehensive Economic Partnership Agreement (CEPA) has boosted overall trade figures, there remains a lack of expansion into new categories, keeping trade concentrated in a few sectors like gems, jewelry, petroleum, and smartphones. This limits broader economic gains and reduces diversification.
- Growing Imports and Trade Imbalance: There has been a significant 19% increase in imports from the UAE, totaling USD 53,231 million in FY23. This spike in imports, focused on a few key sectors, is affecting India’s trade balance and placing stress on its trade surplus.
- Export Barriers: Indian exports are hampered by requirements such as Halal certification, which restrict market access and competitiveness for processed foods in the UAE due to these non-tariff barriers.
- Labor Rights Concerns: The Kafala system in Gulf countries, which grants nearly complete control over migrant workers’ employment and immigration status, raises serious concerns about the rights and welfare of migrant laborers.
- Regional Conflicts: Navigating regional tensions, such as the Israel-Hamas conflict and the strain between Iran and Arab nations, adds a layer of complexity to India’s foreign relations and strategic planning.
- Financial Assistance to Pakistan: UAE’s financial support to Pakistan has sparked worries about potential misuse for activities that could be detrimental to India, potentially souring bilateral relations.
- Diplomatic Friction: The support the UAE provides to Pakistan and the aforementioned challenges could potentially create friction between India and the UAE, complicating ongoing and future diplomatic interactions.
-Source: The Hindu
