India’s ‘Re-engagement’ with West Asia

25th Aug 2015 Featured, Political-Affairs

Prime Minister Narendra Modi will embark on a two-day trip to United Arab Emirates (UAE) on August 16-17, 2015. It is going to be a historic trip as it is going to first such trip undertaken by an Indian PM in 34 years, last being PM Mrs Indira Gandhi in 1981. The visit also carries significance because it is coming in the backdrop of his scheduled visit to Israel and is seen as a balancing act by India to ally the fear of the region. It is also important as it comes after the resolution of Iran-P5+1 nuclear deal and changed geopolitical scenario of West Asia.

India and UAE enjoy strong bond of friendship founded over a millennia old cultural, religious, and economic interaction between the two regions. People to people contacts and barter trade have existed for centuries. The relationship has continued to flourish even after the establishment of UAE Federation in 1971 and trade has been the cornerstone of this relationship. Over the years, the diversity of this engagement has encompassed a number of fields in addition to trade and investment like energy, renewables, defence, agro-products, pharmaceuticals, culture, and education. Indo-UAE bilateral has evolved into a significant partnership in the economic and commercial sphere. Indo-UAE trade, valued at US $ 180 million in 1970’s, is today around US $ 60 billion making UAE, India’s third largest trading partner for the year 2013-14 after China and United States (US). The two countries have been largest trading partners for several years except in 2011-12 and 2013-2014. In addition, India is UAE’s second largest export destination amounting to US $ 30 billion for 2013-14. All the figures exclude oil trade, which demonstrates to the importance of this economic engagement.

India also contributes to the UAE economy indirectly i.e. being a source of human resource. UAE is home to large Indian expatriate community of 2.6 million people. Professionally qualified personnel constitute about 15-20 per cent of the community, followed by 20 per cent of white-collar non-professionals and remainder 65 per cent comprise of blue-collar workers. There is also a significant number of business community from India. Indian community has contributed in a major way in the economic development of UAE, which in turn has benefitted India in the form of large-scale remittances, amounting to over US $ 15 billion.

India-UAE bilateral relationship is not restricted to only trade, investment, and diaspora. There is bilateral cooperation between the two countries in the field of defence. Bilateral defence cooperation between the two countries has been steadily growing in consonance with other aspects of the bilateral relationship. There have been regular high level exchanges at the level of Services Chiefs, functional level exchanges and military education exchanges between the two countries. The ships of the Navies of both countries have regularly made port calls enhancing bilateral defence co-operation. Defence cooperation between the two countries is steered through a Joint Defence Cooperation Committee (JDCC) at the ministry level and Naval Staff talks at the HQ level which identified new areas of co-operation between the two nations.

During his visit, PM Modi will be looking to further diversify bilateral trade and investments as well as expand the scope of defence cooperation. The Gulf nation is the 10th biggest foreign investor in India­-an estimated US $ 3.01 billion flowed in as of January and is as of now third largest trading partner after China and US. The potential for growth for the bilateral relationship can be ascertained from the fact that India is piped to become UAE’s largest trading partner by 2030, surpassing China and US.

On December 12, 2013, India and UAE signed a Bilateral Investment Promotion and Protection Agreement (BIPPA). India now has such agreements with all the Gulf Cooperation Council (GCC) countries, which also opens the possibility of exploring an India-GCC Free Trade Agreement, which has been on a backburner so far. The FTA will remove restrictive duties and bring down the tariffs on goods being traded. During the scheduled visit of PM Modi an effort can be made to revive the India-GCC FTA talks, the two countries would also like to intensify cooperation in counter terrorism, maritime security, prisoner swap, cooperation in agriculture and food security, while UAE is expected to seek more protection of its investments in India.

The author is a Strategic Affairs Researcher with the Oval Observer Foundation.

Published first on IndraStra.com (http://www.indrastra.com/2015/08/FEATURED-Modi-in-UAE-An-Assessment-by-Shashwat-Tiwari.html)