A Bridge Across the Arabian Sea: The Enduring Partnership of India and the UAE

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The UAE is one of India's largest trading partners and a key source of foreign direct investment (FDI). The Comprehensive Economic Partnership Agreement (CEPA) (2022) aims to boost bilateral non-oil trade to over $100 billion by 2030. (Image:Getty Images)

Context: India and the UAE reaffirmed their commitment to strengthening bilateral defence cooperation during the 13th India-UAE Joint Defence Cooperation Committee (JDCC), held in New Delhi. Both sides agreed to elevate their defence ties to meet emerging challenges in areas such as trade, investment, and social relations.

History of India-UAE Relations:

  • Ancient Connections:
  1. Evidence of maritime trade between the Indus Valley Civilization (Meluha) and Sumerian cities, with their location in present-day UAE and Oman, exist.
  2. Trade was dominated by traditional goods including pearl, dates, and spices, along with the presence of a large Indian diaspora in the region for a long time.
  • Post-Independence and the Formation of the UAE:
  1. The discovery of oil in 1960s transformed the UAE's economic prospects. India, being a major consumer of oil, became a key trading partner for the newly oil-rich country.
  2. Formal diplomatic relations between India and the UAE was established in 1972. The UAE opened its embassy in New Delhi in 1972, and Indian embassy in Abu Dhabi followed suit in 1973.
  • The Era of Economic Partnership:
  1. PM Modi's 2015 visit to the UAE marked the first visit by an Indian Prime Minister in 34 years, laying the foundation for the 'Comprehensive Strategic Partnership'.
  2. In 2017, the two countries formally upgraded their relations to a 'Comprehensive Strategic Partnership' during the visit of the Crown Prince of Abu Dhabi to India.
Areas of Cooperation:
  • Economic and Commercial Cooperation:
  1. Trade and Investment: The UAE is one of India's largest trading partners and a key source of foreign direct investment (FDI). The Comprehensive Economic Partnership Agreement (CEPA) (2022) aims to boost bilateral non-oil trade to over $100 billion by 2030.
  2. Energy Security: The UAE being a crucial supplier of crude oil to India, cooperation extends to long-term supply agreements, investments in India's strategic petroleum reserves, and collaboration in renewable and clean energy.
  3. Financial Integration: Initiative like the Local Currency Settlement System (LCSS) and the introduction of India's RuPay card in the UAE are aimed at facililtating easier cross-border transactions.
  4. Infrastructure and Logistics: Collaboration on major infrastructure like the India-Middle East-Europe Economic Corridor (IMEC) aims to boost connectivity and trade. Initiatives like Bharat Mart in Dubai seek to provide a platform for Indian manufacturers to showcase their products globally.
  • Defence and Security Cooperation:
  1. Joint Exercises: Both countries conduct regular joint military exercises including Desert Eagle (Air Force), Zayed Talwar (Navy), and Desert Cyclone (Army) to enhance interoperability and mutual understanding.
  2. Maritime Security: India and the UAE have an agreement on maritime security including collaboration on search and rescue operations, ani-piracy efforts,and information sharing.
  3. Defence Manufacturing and Technology: A key focus area is the co-development and joint manufacturing of defense technologies, including in emerging fields like Artificial Intelligence (AI) and shipbuilding.
  • Science, Technology, and Innovation:
  1. Space: India and the UAE are members of the Artemis Accords, a US-led international agreement to guide space exploration.
  2. Emerging Technologies: The two countries have formed partnerships in areas such as fintech, artificial intelligence, and digital public infrastructure.
  • Cultural and Educational Cooperation:
  1. People-to-People Ties: The large Indian diaspora in the UAE is a vital link between the two nations. Key events include the International Day of Yoga and the inauguration of Hindu temple in Abu Dhabi.
  2. Educational Cooperation: An MoU has been signed to facilitate student and faculty mobility, joint research, and academic exchange programs. (e.g establishment of an IIT-Delhi campus in Abu Dhabi)
  • Multilateral Cooperation:
  1. I2U2 Grouping: India and the UAE are members of I2U2 which also includes the US and Israel, focusing on joint investments in areas like water, energy, transportation, space, and food security.
  2. G20 and BRICS: The UAE's recent inclusion in BRICS further highlight the growing alignment between the two nations on global issues.
  3. Climate Change: The UAE's hosting of COP28 provided a significant opportunity for both countries to strengthen their cooperation on climate action.
Challenges in India-UAE Relations:
  • Economic Challenges: 
  1. Trade Imbalance: India continues to have a significant trade deficit with the UAE, due to India's heavy reliance on crude oil imports from the UAE.
  2. Non-Tariff Barriers: Indian exporters, particularly in sectors like food and agriculture, face challenges from non-tariff barriers such as strict sanitary and phytosanitary (SPS) measures and mandatory certifications (like Halal), which can hinder market access.
  3. Energy Pricing: The UAE being a key member of OPEC+, disagreements over oil production quotas and pricing policies have led to a different perspective on energy security and market stability.
  • Geopolitical Challenges: 
  1. Balancing Regional Relations: The Middle East being a volatile region, India has competing interests in the region. Iran, which is a regional rival of the UAE, has a long-standing partnership with India. Moreover, the UAE's growing ties with China present a challenge for India, which is also vying for influence in the region
  2. Regional Instability: Ongoing conflict in the Middle East, such as the Israel-Hamas conflict and Houthi attacks in the Red Sea, pose a direct challenge to projects like the India-Middle East-Europe Economic Corridor (IMEC).
  • Socio-Cultural Challenges:
  1. Welfare of Indian Workers: The blue-collar Indian workers in the UAE face challenges related to the Kafala (sponsorship) sytem which leads to exploitative labour conditions.
  2. Competition and Discrimination: While skilled Indian professionals are highly respected, low-wage workers often face stigmatization. Additionally, competition from other nationalities can contribute to stress.
  3. Remittance and Financial Issues: Migrant labourers face challenges like low financial literacy and debt traps that adversely impact their financial well-being and ability to support their families back home.
Way Forward:
  • 2+2 Ministerial Dialogue: Exploring a 2+2 dialogue format could provide a dedicated platform to address strategic and security challenges more effectively.
  • Reforming Labour Policies: The UAE's continued efforts to reform the Kafala system and India's focus on a more transparent recruitment process are crucial for the welfare of the Indian diaspora.
  • Diversifying Economic Ties: The success of CEPA and the focus on new sectors like technology, renewables, and defense manufacturing will be key to reducing the trade imbalance and fostering a more balanced economic relationship.
  • Enhanced Diplomacy: Continuous high-level engagement and a flexible diplomatic approach will be essential to navigate the complex geopolitical landscape of the region and balance relations with other key players.
Conclusion: As both nations continue to invest in each other's growth and development, their relationship is poised to become an even more significant force in shaping the geopolitical and economic landscape of Asia and beyond. The future of India-UAE relations promises to be one of deeper integration, enhanced cooperation, and shared leadership on the global stage.

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