10-September-2024-Special-Article

INDIA-UAE BILATERAL TALKS

India and the United Arab Emirates (UAE) have strengthened their relationship in recent years, marked by a Comprehensive Strategic Partnership aimed at enhancing cooperation across multiple sectors.

The latest round of bilateral talks between India’s Prime Minister and the Crown Prince of Abu Dhabi in New Delhi has led to the signing of several crucial agreements.

These pacts focus on expanding energy collaboration, nuclear cooperation, and developing infrastructure projects, further cementing the partnership between the two nations.

Key Agreements Signed

Civil Nuclear Cooperation:

• India and the UAE signed a Memorandum of Understanding (MoU) for collaboration in civil nuclear energy.
• The agreement involves India’s Nuclear Power Corporation of India Limited (NPCIL) and the Emirates Nuclear Energy Corporation (ENEC) to manage operations and maintenance at the Barakah Nuclear Power Plant.
• Barakah, located in Al Dhafra in Abu Dhabi, is the first nuclear power plant in the Arab world.

Energy Sector Cooperation:

• LNG Supply: An MoU was signed for the long-term supply of Liquefied Natural Gas (LNG) from the UAE to India, ensuring energy security for India.
• Strategic Petroleum Reserve (SPR): India and the UAE also agreed on an MoU regarding petroleum supply to India’s Strategic Petroleum Reserve (SPR). SPRs help stabilize crude oil availability during geopolitical or supply crises.

Food Parks Development:

• Another MoU was signed between the UAE and the government of Gujarat for the development of food parks in India.
• Under the I2U2 grouping (India, Israel, UAE, and the USA), food parks in Gujarat and Madhya Pradesh were envisaged, aimed at improving agricultural productivity and food security.

Importance of UAE for India

Political Partnership:

• The India-UAE relationship has evolved into a Comprehensive Strategic Partnership, underscoring their deepening political and strategic ties.
• Both countries engage in a Strategic Security Dialogue, reflecting growing cooperation on regional and global security matters.

Bilateral Trade:

• The UAE is India’s third-largest trading partner. The Comprehensive Economic Partnership Agreement (CEPA) signed in 2022 has boosted trade between the two nations.
• Bilateral trade grew from USD 72.9 billion in 2021-22 to USD 84.5 billion in 2022-23, representing a 16% year-on-year growth.

Foreign Direct Investment (FDI):

• The UAE emerged as the fourth-largest investor in India during FY23.
• FDI inflows from the UAE to India surged threefold, from USD 1.03 billion in 2021-22 to USD 3.35 billion in 2022-23.

Energy Security:

• The UAE plays a vital role in India’s energy security as a significant oil supplier. Additionally, the UAE’s participation in India’s Strategic Petroleum Reserve bolsters India’s energy independence.

Financial Cooperation:

• India and the UAE have strengthened financial ties, with the introduction of India’s RuPay card and Unified Payments Interface (UPI) in the UAE.
• Both countries have agreed to a Local Currency Settlement (LCS) system, allowing trade settlements in Indian Rupees (INR) and UAE Dirham (AED).

Space Cooperation:

• The Indian Space Research Organisation (ISRO) and the UAE Space Agency signed an MoU for cooperation in space exploration for peaceful purposes, enhancing scientific and technological collaboration.

Defence and Security Cooperation:

• India and the UAE have bolstered their defence ties, with a focus on counterterrorism, intelligence sharing, and joint military exercises like “Desert Cyclone.”
• The UAE has also expressed interest in acquiring Indian defence products such as the BrahMos missile, Akash air defence systems, and Tejas fighter jets.

Multilateral Engagements:

• The UAE’s participation in the I2U2 (India, Israel, UAE, USA) grouping and its involvement in the India-Middle East-Europe Economic Corridor (IMEC) demonstrates the UAE’s importance in regional and global strategic alliances.

Regional Stability:

• The UAE’s role in the Abraham Accords, facilitating diplomatic relations with Israel, enhances regional peace, which is critical for India’s energy security.
• Stability in the Middle East ensures a steady supply of oil and gas imports to India.

Cultural and Diaspora Links:

• The Indian diaspora in the UAE, numbering around 3.5 million, plays a crucial role in strengthening the bond between the two nations.
• Cultural ties have deepened, with initiatives like the construction of the first Hindu temple in Abu Dhabi promoting mutual respect and understanding.

Challenges in India-UAE Relations

Limited Trade Diversification:

• Despite the boost in trade from the CEPA agreement, trade remains concentrated in a few sectors such as petroleum, gems and jewellery, and electronics.
• Greater diversification into new sectors such as technology and pharmaceuticals is needed to expand economic opportunities.

Rising Import Costs:

• Imports from the UAE have surged, increasing 19% year-on-year in FY23. The rising import costs and dependency on specific sectors can affect India’s trade balance.

Non-Tariff Barriers:

• Indian exports face non-tariff hurdles like mandatory Halal certification, which impacts the volume of processed food exports to the UAE. These barriers reduce India’s market competitiveness.

Human Rights Issues:

• The Kafala system in the UAE, which governs the employment of migrant laborers, has raised concerns about worker exploitation.
• India is advocating for reforms to improve working conditions for Indian migrant workers in the UAE.

Diplomatic Challenges:

• Regional conflicts, such as tensions between Iran and Arab nations, require India to navigate complex diplomatic relations while maintaining its partnerships in the Gulf.

Financial Assistance to Pakistan:

• The UAE’s financial support to Pakistan raises concerns in India, as it could potentially be used for anti-India activities. This adds complexity to India’s diplomatic relations with the UAE.

Way Forward

Diversification of Trade:

• India and the UAE should focus on diversifying trade by promoting emerging sectors such as renewable energy, technology, and pharmaceuticals.

Economic Collaboration:

• Joint ventures and partnerships in energy, infrastructure, and manufacturing can help balance trade relations and mitigate the impact of high import costs.

Human Rights Dialogue:

• India should engage with UAE authorities to address concerns about the Kafala system and advocate for labor reforms to protect migrant workers’ rights.

Geopolitical Cooperation:

• India must continue to engage in proactive diplomacy to align on common interests while ensuring that geopolitical tensions in the region do not affect bilateral relations.

Conclusion:

India and the UAE have made significant progress in strengthening their bilateral relationship through strategic agreements across various sectors, from energy security to nuclear cooperation and trade.

However, challenges like trade imbalances, non-tariff barriers, and human rights concerns need to be addressed. Both nations have the potential to further elevate their partnership by focusing on diversification, economic collaboration, and regional stability.

Mains question:

1. “Examine the significance of India-UAE bilateral relations in the context of energy security, trade diversification, and regional stability, while addressing the challenges and opportunities in their partnership.”(150 WORDS)