India-UAE Relations: Significance, Challenges, Way Forward

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India-UAE relationship can be seen as a bond built for the ages. Starting the diplomatic relations in 1972, both the countries enjoy strong bonds of friendship based on age-old cultural, religious and economic ties between the two nations. Recently, India held a joint commission meeting with UAE on trade, discussed regional, international developments. The Indian side invited further investments from the UAE in key sectors of the Indian economy, such as infrastructure, including logistics, food parks, highways, ports, airports, renewable energy and defence. Moreover, India has welcomed full normalization of ties between the UAE and Israel through the Abraham Accord last month. In this context, let’s examine the India-UAE relations in a detailed manner.

Mind map of India-UAE Relations

Diplomatic Relations between India and the UAE

  • India and United Arab Emirates (UAE) established diplomatic relations in 1972.
  • The UAE Embassy in India was opened in 1972 while the Indian Embassy in UAE was opened in 1973.

Political Relations between India and the UAE

  • India-UAE bilateral relations have received impetus from time-to-time with exchange of high-level visits from both sides.
  • The visit of Prime Minister of India to UAE on 16-17 August 2015 marked the beginning of a new Comprehensive and Strategic partnership.
  • Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of UAE Armed Forces, visited India from February 10-12, 2016.
  • Crown Prince visited India again in 24-26 January 2017 as the Chief Guest at India’s Republic day celebrations.
  • During this visit, the relations were upgraded to the Comprehensive Strategic Partnership.
  • Both sides also signed MoUs on strengthening cooperation in cyberspace, defence, maritime/road transport, SME, agriculture, manpower, human trafficking, entry visa exemption for diplomatic, special and official passport holders, media, energy, etc. during the visit
  • UAE is one the very few countries where the Prime Minister of India, Narendra Modi visited twice.
  • The State visit of the Prime Minister to UAE on 10-11 February, 2018 helped in sustaining the momentum generated by earlier visits of Crown Prince in 2017 and 2016 and that of PM in 2015.
  • India and the UAE signed an MoU for cooperation in Africa.
  • India and the UAE signed a currency swap agreement in December 2018 which will boost trade and economic relationship between two countries and reduce India’s dependence on the US Dollar.
  • Last year, In August 2019 Prime Minister Narendra Modi paid a three-day visit to the United Arab Emirates and During his visit, he received the Order of Zayed, the highest civil decoration of the UAE.
  • Also, Prime Minister Narendra Modi launched the RuPay card in the UAE, making the UAE the first country in West Asia to initiate the RuPay card scheme.
  • India has already launched the RuPay card in Singapore and Bhutan.
  • The UAE receives about three million Indian tourists annually.
  • Acceptance of Rupay card in UAE will lower the charges as tourists will save on the exchange rate.

Most probable and repeated topics of upsc prelims

Defence Cooperation between India and the UAE

  • Bilateral Defence Interaction between India and UAE has been steadily growing under other aspects of the bilateral relationship.
  • There have been regular high-level exchanges at the level of Service Chiefs, functional level exchanges and military educational exchanges between the countries.
  • The ships of the Navies of both countries have regularly made port calls enhancing bilateral defence co-operation.
  • India and UAE hold an Annual Defence Dialogue to discuss the security and defence co-operation issues between the two countries.
  • Defence co-operation between the two countries is steered through a Joint Defence Co-operation Committee (JDCC) at the Ministry level and Naval Staff Talks at the HQ level which identify new areas of co-operation between the two nations.
  • A permanent resident Defence Advisor (DA) has been posted to this Mission with effect from March 2013.
  • After the establishment of the DA’s office, bilateral defence co-operation has been strengthened further, notably in the field of defence training and regular exchange programs.
  • Co-operation in the field of Defence, Security and Energy has shown a positive change after the VVIP exchange of visits in the last two years.
  • In the recent years, IAF participated in a bilateral exercise with the UAE counterparts in May 2016 & UAE Air Force Officers participated as Observers in Trilateral Air Exercise on Humanitarian Assistance & Disaster Relief (HADR) theme held in March 2018.
  • Two Indian Navy Ships participated in the maiden Indian navy(IN)-UAEN Bilateral Exercise in March 2018 named Gulf Star 1 and IN and Coast Guard have made several port calls to Abu Dhabi and Dubai, along with the associated PASSEX.
  • IN Ships have regularly been participating during IDEX/NAVDEX held in Abu Dhabi biennially. Three different delegations from UAE visited the Def Expo 2018 in India in Feb 2018 led by UAE MoS for Defence Affairs, who later made an official visit to India in Oct 2018.
  • A large delegation from MoD of UAE participated in Aero India at Bangalore in Feb 2019. Vice Chief of Air Staff, IAF along with delegation attended 9th Dubai International Air Chiefs’ Conference and Dubai Air Show from in Nov 2019.
  • For the first time an Indian pavilion was set up at Dubai Airshow with HAL, DRDO and BDL as the participating DPSUs. Besides, there are many delegation visits from both sides to each other Centers of Excellence.

Economic Relations between India and the UAE

  • UAE is India’s third-largest foreign trading partner with bilateral trade at around 60 billion USD.
  • India is the UAE’s largest trading partner.
  • UAE is the second-largest export destination of Indian Goods and Services.
  • Indians form the largest Foreign Diaspora in UAE with over 3 million people.
  • It is also the largest population of Indian expatriates anywhere in the world.
  • They form the soft power of India and the most important element in the bilateral relationship – people to people tie.
  • UAE is one of the important crude oil suppliers to India and important for India’s energy security.

Cultural Cooperation between India and the UAE

  • Both countries share historical, cultural ties and are making sincere efforts to cultivate regular cultural exchanges both at official and popular levels.
  • India and the UAE signed a Cultural Agreement in 1975.
  • A bilateral Cultural Exchange Program was signed for the period 1994-1996.
  • The ICCR had opened a Culture Centre in Abu Dhabi in 2009.
  • India was designated as the Guest of Honor Country at the Abu Dhabi Music and Art festival 2018.

Why is the relation with the UAE important to India?

  • UAE is geographically located in the Strait of Hormuz. This is the world’s most important oil artery and strategically important for India’s energy security.
  • Over 3 million Indians live in the UAE. This is the biggest Indian Diaspora anywhere in the world. They contribute to the Indian economy through large remittances.
  • Safety of Indians is a priority of the Indian government for which it needs the support of the UAE government.
  • The UAE has one of the largest Sovereign Fund in the World. UAE wishes to invest funds in India, particularly in National Infrastructure and Investment Fund (NIIF).
  • India needs fund for its infrastructure sector. Also, India needs the UAE to contain Terrorism and Radicalization.
  • The UAE is an influential nation in the Middle East and Muslim World.
  • Of the 24 extraditions from the Middle East in the last few years, 18 had been from the UAE and Saudi Arabia.
  • With US sanctions on Iran, India needs to import crude oil from other sources to meet its energy need.
  • UAE and Saudi Arabia have offered India with additional crude oil supplies to meet India’s growing needs.
  • The UAE has a substantial influence over Pakistan. It deposited 3 billion USD in the account of Pakistan’s central bank.
  • India can use this influence to bring Pakistan to the negotiating table for talks on terrorism and bilateral relations.

What are the growing irritants/concerns between the two?

  • Of late, India started facing backlash in UAE & the Gulf for Islamophobia. 
  • As far as investments are concerned, slow implementation from the Indian side is a major obstacle.
  • It has been noticed that workers from other nationalities, including Filipinos and Bangladeshis are replacing Indian workers.

What are the Implications of the Abraham Accord for India?

Eases India’s Balancing Act:

  • The new accord widens the moderate constituency for peaceful resolution of the Palestine dispute, easing India’s diplomatic balancing act.

Significance on Foreign Policy:

  • India has stronger, multifaceted and growing socioeconomic engagements with Israel and the Gulf countries. Therefore, any changes in regional dynamics will impact India’s Strategic interests in the region.

India’s Position:

  • Geopolitically, India has welcomed the establishment of diplomatic relations between the UAE and Israel, calling both its strategic partners

Repercussions on Jihadi Fringe movement:

  • The Israel-GCC ties may provoke new polarization between the Jihadi fringe and the mainstream.

Challenges on the Economic front:

  • India has acquired a large and rewarding regional footprint, particularly as the preferred source of manpower, food products, pharmaceuticals, gem and jewellery, light engineering items, etc.
  • This position could be challenged by Israel, which has niche strength in defence, security, solar power, horticulture etc.

Impact on India–Iran Relations:

  • For decades, one of the main sources of instability in West Asia has been the cold war between Saudi Arabia (Sunni) and Iran (Shia). This accord may make the rift wider and more violent, thus testing India-Iran relations.

New Arena of Proxy War:

  • The possibility of the southern Gulf becoming the new arena of the proxy war between Iran and Israel cannot be ruled out, particularly in Shia pockets. India would have to be on its guard to monitor such conflicts.

What can be the way forward?

  • India needs to ensure the execution of the investment projects with the required expertise.
  • Potential areas to enhance bilateral trade include defence trade, food and agricultural products as well as automobiles. Medical tourism can be an important area where India can attract Emiratis.
  • Indian companies with expertise in the renewable energy sector can invest in the UAE.
  • In the defence sector, there is a need to further enhance cooperation through joint training programs
  • India should use the opportunity Abraham accord offers to give it a bigger role in a region which is its strategic backyard.
  • The Abraham accord opens up new opportunities for India to play a much larger role in the regional security and stability in the Gulf, where New Delhi enjoys special relations with both Abu Dhabi and Jerusalem.

Conclusion

  • With India’s growing economic, political and strategic interests, it cannot stay aloof for long with the current geopolitical environment in the Middle East, whether it is war in Yemen to strained ties of UAE and others with Qatar and Iran. India will have to engage more vigorously with developments in the region.
  • Any kind of extended crisis in the region will not just affect India’s energy security, but also create insecurity among large Indian Diasporas. This has to be a priority for India’s foreign policymakers.
  • Indian Diasporas have been an important driver of the UAE’s economy, from the labour force to investments.
  • India should use them as soft power for furthering Indian interests.
  • India – UAE relationships are indeed going through the golden phase, but the former needs to maintain an incremental approach in furthering the interest of both.
  • Short-term and long-term interest should form a proper mix in this approach.

Practice Question for Mains

  1. Critically examine India’s West Asia diplomacy to get a boost following the Israel – UAE peace deal. (250 Words)
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