Introduction to India-UAE Relations
India and UAE have been known to have significant ties between them since historical times. This cultural affinity and shared aspirations have indeed led to both countries coming together and sharing a stronger bond. India and UAE established diplomatic ties in 1972. While the UAE opened an embassy in India in 1972, the Indian Embassy opened in 1973. While this was definitely the start of India-UAE ties, they were strengthened in 2015. This was the year when Prime Minister Narendra Modi first visited the UAE. As of now, Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed is visiting India. It has hence led to the signing of crucial agreements that could strengthen this relationship further.
History of India-UAE Relation
The start of the India-UAE ties could be dated back to the ancient maritime trade across the Indian Ocean, where Indian seafarers used to exchange textiles, spices, and precious stones with the Arabian Gulf, bringing back a lot of dates, pearls, and even rich cultural influences. This trade was more about the economic side, and it hence created a sense of mutual respect along with cultural exchanges. The Malabar coast and the Arabian Peninsula were significant trade hubs.
The discovery of oil in the 20th century also led to the formation of the UAE in 1971. This led to a new chapter of India-UAE ties. India recognized the strategic importance of the UAE and gave ahead a hand in diplomatic relations, which were successfully established. This move further led to an expansion in political, economic, and cultural domains.
Narendra Modi’s visit in 2015 was also of great importance, especially since it was the first time an Indian Prime Minister had visited the UAE. This led to high levels of cooperation in the defence, trade, and energy sectors, critical developments like the UAE-India Comprehensive Economic Partnership Agreement, and considerable investment flows.
Significant achievements of the India-UAE relations
After the UAE-India ties were strengthened, both countries indeed achieved many benefits. Here are a few of the ways each relationship has supported both countries in reaching the top levels.
Economic Relations
- Investment—The UAE invested around USD 20 to 21 billion in India, of which around USD 15.5 billion was used for FDI. ADIA, the UAE’s sovereign wealth fund, also actively invested in many Indian projects, such as renewable energy and the NIIF master fund.
- Trades – It is to be noted that the India-UAE trade increased from USD 180 million in the 1970s to about USD 85 billion in the year 2022-23. This made UAE as the India’s 3rd most significant trading partner. The signing of CEPA also led to a substantial reduction in tariffs being cut out on goods.
- Imports—The UAE is an essential partner of India when it comes to ensuring energy security. The UAE tends to export gems, petroleum, chemicals, and minerals to India. Hence, the UAE is India’s fourth-largest source of crude oil and the second-largest partner for LPG and LNG.
- Exports—UAE is considered to be India’s second-largest export destination after the US, with exports worth USD 31.61 billion in 2022-23. India also exports a rather wide range of goods, such as gems, petroleum, food items, textiles, and even engineering goods.
- Financial system—In 2023, India and UAE signed a MoU for a Local Currency Settlement (LCS) system that would facilitate better cross-border transactions in AED and INR and enable the use of local currencies.
Geostrategic relations
The Middle East region is undoubtedly a theatre of warfare, such as the Israel-Hamas war or the conflict in Syria. These conflicts have also had major implications for India, for example, the rise of ISIS recruitment from Kerala. It is, hence, important that the India-UAE relationship secure both nations’ external security, especially since the area is also prone to piracy.
People-to-people relations
- Education—An agreement signed in July 2023 established the IIT Delhi campus in Abu Dhabi, which will offer a variety of programs starting in 2024. Multiple leading universities also have campuses in the UAE.
- Cultural Relations—In 2021, NYU Abu Dhabi and the Indian Council for Cultural Relations agreed to establish a visiting professorship, which enhanced the academic exchange. A BAPS Mandir is also under construction in Abu Dhabi, and its inauguration is set to occur in 2024, which could also enhance people-to-people ties.
Geopolitical relations
- Better coordination with regional groups that are antagonistic to India—UAE tends to command significant respect when it comes to regional groupings such as OIC and GCC. An improvement in this relation could also open India’s door to the India-GCC FTA.
- Cooperation on multilateral forums—India and the UAE have strong cooperation when it comes to the UN. UAE also supports India’s bid entry into the UNSC. UAE was also a guest country at the G20 summit during India’s presidency.
Challenges to the India-UAE Relationship
While the relationship between India and the UAE is undoubtedly one of the top tier, it also has its challenges. Here are a few of the challenges to the India-UAE relationship.
The Kafala system
The welfare and rights of Indian expats in the UAE, mainly blue-collar workers, remain a concern. The inhumane conditions imposed by the Kafala system on immigrants engaged in blue-collar jobs in the UAE are also a major challenge in the relations between India and the UAE. The system gives employers disproportionate control over the migrant workers’ immigration and employment status.
Regional conflict
Conflicts in the Middle East that primarily involve Israel, Palestine, and Lebanon and indirectly involve the US, Iran, and other regional countries could threaten connectivity projects like trade and IMEC. The UAE’s normalization of relations with Israel could also affect India’s relations with Arab countries and Iran.
Non-tariff barriers
Indian exports tend to face hurdles like mandated Halal certification, which could affect the volume of processed foods exported. These non-tariff barriers could also limit India’s market competitiveness and access in the UAE.
Diplomatic balancing act
The need to navigate regional conflicts such as the Hamas-Israel war and tensions between Arab and Iran nations also tends to pose a conflict to the India-UAE ties.
Financial support to Pakistan
The UAE’s assistance in terms of finance towards Pakistan could also convey concerns about the potential misuse of anti-India activities.
What steps should be taken to enhance the India-UAE relationship further?
It has become essential to devise new ways to strengthen the ties between India and the UAE, which could benefit both countries while also reducing risks.
Focusing on areas of common interests
They are engaging in proactive diplomacy to better align with shared interests and ensure that geopolitical tensions do not impact bilateral relations.
Promoting trade diversification
We could focus more on emerging sectors such as renewable energy, technology, and pharmaceuticals to achieve much more balanced trade relationships along with better economic benefits.
Reformation of the Kafala system
India should actively engage with the United Arab Emirates to reform the Kafala system. For example, Qatar has promised to do so based on India’s insistence.
Establishment of 2+2 dialogue
India should also establish more strategic dialogue platforms, such as India’s 2+2 dialogue with Russia and the US. This includes bringing about reforms in terms of the rights and working conditions of migrant labourers.
Conclusion:
The India-UAE ties have evolved from traditional diplomatic ties to much better goals such as mutual respect, strategic alliance, and a shared future. This partnership, hence, extends beyond political and economic domains and is now highlighting cultural integration and technological cooperation. The future of India-UAE ties also looks promising, with a lot of potential growth in various sectors such as AI, education, and healthcare.
FAQ:
India-UAE relations are crucial for economic development and stability in the Gulf. Both nations tend to share many strategic interests and cultural exchanges, which could further strengthen both countries.
India is currently known to be the second largest trading partner of UAE, accounting for almost 9% of the total foreign trade and 14% of non-oil exports. In terms of trade amount, it has increased from USD 180 million per year in the 1970s to USD 84.84 billion per year in 2023
The defence cooperation between UAE and India shows how it is encouraging better economic ties, energy cooperation, and people-to-people connections.
Maritime security emerged as an essential focus area, reflecting the shared interests of India and the UAE in ensuring safer open sea lanes in the Persian Gulf and Indian Ocean. These waterways are vital for global trade and energy security.
