In this article, we will discuss India-UAE Relations. So, let’s get started.
India and UAE
India’s Bilateral Relations with the UAE
- India and the UAE established diplomatic relations in 1972.
- The greater push has been achieved in bilateral relations when the visit of India’s Prime Minister to the UAE in August 2015 marked the beginning of a new strategic partnership between the two countries.
- Further, during the visit of the Crown Prince of Abu Dhabi to India in January 2017 as the chief guest at India’s Republic Day celebrations, it was agreed that bilateral relations were to be upgraded to a comprehensive strategic partnership.
- This gave momentum to launching negotiations for an India-UAE comprehensive economic partnership agreement.
Economic Significance of the UAE
- The UAE has emerged as an important economic hub not just within the context of the Middle East/West Asia, but also globally.
- The 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.
- Since 2012, growth has been led, according to a World Trade Organisation document, by the non-hydrocarbon sectors reflecting the successful diversification of the economy.
- 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’s Economic Ties with UAE
- The India-UAE total trade merchandise has been valued at U.S.$52.76 billion for the first nine months of the fiscal year 2021-22, making the UAE India’s third largest trading partner.
- 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.
- A trade agreement is also an enabler for two-way investment flows. 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.
- Also, many Indian companies have set up manufacturing units either as joint ventures or in Special Economic Zones for cement, building materials, textiles, engineering products, consumer electronics, etc. in the UAE.
- Many Indian companies have also invested in the tourism, hospitality, catering, health, retail, and education sectors.
- Under India’s revamped FTA strategy, the Government has prioritised at least six countries/regions to deal with, in which the UAE figures at the top of the list for an early harvest deal (or Interim Trade Agreement), the others are the UK, the EU, Australia, Canada, Israel and a group of countries in the Gulf Cooperation Council (GCC).
- The UAE too announced earlier its intent to pursue bilateral economic agreements with India and seven other countries (U.K., Turkey, South Korea, Ethiopia, Indonesia, Israel, and Kenya).