Ties between the UAE and India are witnessing rapid and significant growth in economic, political, trade, investment, energy and cultural fields driven by millennia old bonds of friendship, mutual interests and people-to-people close contact.
The relationship has flourished since the creation of the UAE Federation in 1971 and trade has played a major role in giving momentum and strength to them.
At the heart of its foreign policy, the UAE is sincerely and particularly interested in extending bridges of cooperation and friendship with India as one of emerging and growing economic and political powerhouses and influencers in the world.
Thanks to political understanding and rapprochement, prudent foreign policy as well as vital mutual economic interests, bilateral relations have grown by leaps and bounds over the recent decades. UAE foreign policy, since being laid by the late founding father, Sheikh Zayed bin Sultan Al Nahyan, has been attaching paramount importance to these ties, which were delivered a big boost when Sheikh Zayed paid a historic visit to India in 1975 and had talks with Indira Gandhi, the then Indian Prime Minister, the Indian President and senior statesmen.
Today, President His Highness Sheikh Khalifa bin Zayed Al Nahyan is not only pursuing the same path as Sheikh Zayed, but has also added further vibrancy, momentum and strength to these ties.
The UAE and India are making tremendous efforts to scale their economic, investment and trade cooperation to new heights, given the fact that India is today emerging as one of the world's fastest growing economies. Forecasts predict that the South Asian country will rise as the world's third largest economy by 2030 after the United States and China. The UAE was the third key trade partner to India after China and the US in 2013 and 2014.The two-way trade has seen meteoric growth over the years, rising from US$43.5 billion in 2009 to nearly US$60 billion in 2014 from just US$180 million in 1971. UAE-India bilateral trade continued to grow in strength with Indian exports of goods and commodities expected to surge to US$100 billion and two-way trade exchange to US$160 bn by 2030, making the UAE the largest trade partner to India in the world.
During the India fiscal year April 2013 to March 2014, India’s foreign exports stood at US$300 billion with the UAE market receiving goods worth US$28 billion or 28%.
According to a study by the UAE Ministry of Economy, India is the number one trade partner of the UAE with a relative share of 9.8% of the total UAE non-oil trade. It also ranked first in the UAE’s overall exports with a relative share of 14.9% and ranked second in the UAE's re-exports to the world accounting for 8.7% of the UAE's total re-exports. India also ranked third in the UAE’s total imports with a relative share of 9.2%.
UAE's non-oil exports to India in 2014 stood at nearly $5.3 billion, with a decline of 31% compared to 2013. Overall, 10 commodities accounted for 88.5% of the total non-oil exports of the UAE to India. Different varieties of gold (raw, dust, and the semi processed) occupied 59% of the total non-oil exports to India which stood at US$3.16 billion, down by 46.6% compared to 2013. This was followed by ornaments and jewelry standing at $364 million with an annual growth of 41%, and by trade in copper wire with a total value of US$319 million and an annual growth rate of 26%.
In terms of the UAE’s imports, India is the third largest trade partner of the nation with imports from India touching nearly US$17.4 billion in 2014, a decline of 12.4% from 2013. Ten commodities accounted for 67% of imports from India during 2014. Various gold varieties dominated the list of the UAE’s imports from India with a total value of US$ 4.6 billion accounting for 26.4% of the total UAE imports from India, with an annual decline of 1.5%.
Diamonds came in second with a total value of nearly US$3.2 billion, accounting for a 47% downfall compared to 2013. Jewelry and ornaments occupied third spot with a total value of US$2.1 billion representing a growth of 30%. It is notable that the UAE’s imports of wheat rose by 179%.
The UAE is the largest Arab investor country in India, accounting for 81.2% of total Arab investments in India, and is ranked 11th in the world in terms of foreign direct investments in India. The total UAE investments in India amounted to US$8 billion, including US$2.89 billion in the form of direct foreign investments. UAE investments in India are concentrated in five sectors: construction (16%), energy (14%), metallurgy (10%), services sector (10%), computer software and hardware (5%). The other sectors include petroleum products, precious metals, gems and jewelry, minerals, chemicals, wood and wood products.
Major UAE companies, including Emaar Properties, Abu Dhabi Investment Authority, Abu Dhabi National Energy Company (Taqa) and DP World have a long history and considerable experience in working in India and have undertaken many joint mega projects and investments. Global marine terminal operator, DP World, operates six key container terminals in India and is currently developing the International Container Trans-shipment Terminal (ICTT) in Kerala. DP World has invested billions of dollars in India to become the largest container terminal operator in the country, as it aims to capitalise on the market's economic and foreign trade growth of recent years.
The value of investments by Indian companies in the UAE is estimated at more than US$55bn, according to statistics by the Indian Business and Professional Council. There are 50,000 Indian companies operating in the UAE's specialised economic and free trade zones across sectors and industries of cement, building and construction, textiles, ICT, consumer electronic, engineering and electronic services and products, tourism, hospitality, manufacturing, financial services, industry, health, education and retail trade. These companies employ about one million Indians.
The UAE hosts the largest Indian community overseas, with more than 2.6 million Indians living and working in the UAE. Their annual remittances are estimated by analysts to be more than US$12 billion - clear evidence of the ever-growing robust bilateral ties and vital mutual interests.
India occupies the seventh rank in terms of accumulated Foreign Direct Investment (FDI) in the UAE.
To facilitate the free framework of movement of investment and capital, the two countries signed the Bilateral Investment Promotion and Protection Agreement (BIPPA) in 2013, the agreement on reciprocal tax exemption for national carriers in 1989, Double Taxation Avoidance Agreement (DTAA) on income and capital for sovereign funds in 1993 and amended in 2007. To push strategic ties forward, the two countries signed a number of agreements and Memoranda of Understanding to promote cooperation in key sectors like culture, civil aviation, mutual legal assistance in civil and commercial matters, trade and economy, industry, security, organised and cross-border crime, customs etc.
Statistics showed that India has been the key trade partner of the UAE over the recent years, buoyed by increasingly vibrant bilateral trade, economic and investment relations and abundant prospects for joint economic cooperation.
The UAE-India relations go beyond economic, trade and investment exchange to include other promising sectors like the aviation. There are over 950 direct weekly flights between the UAE and India, a number that shows the strength of people-to-people and economic ties between the two countries. Flights between the UAE and India take the lion's share of air traffic between the Arabian Gulf and India.
The Small and Medium-sized Enterprises sector (SMEs) is also a promising area for joint cooperation. The UAE has expressed interest in tapping India's expertise in SMEs to create a vibrant industrial base in the UAE, which could also be of benefit to Indian enterprises. The UAE's economic policy is supporting and encouraging young entrepreneurs to engage in SMEs as part of efforts to deliver long-term social and economic benefits in creating new jobs, promoting entrepreneurship and accelerating diversification in both UAE and Indian economies.
In 2014, India and the UAE signed an MoU to enhance cooperation in renewable energy, especially solar and wind power.
India is looking to strengthen cooperation and investment with the UAE to ramp up efforts in the renewable energy sector. Cooperation under the MoU will help identify areas of mutual interest and develop new and renewable energy for both countries. India stands among the top five countries in terms of renewable energy capacity. It has an installed base of over 30,000 MW. This represents an almost 400 per cent increase in the past five years alone. Renewable energy is one of the most promising sectors of interest to both countries in light of the their great ambitions for renewable, clean energy. The UAE offers attractive incentives to international investors to forge bilateral partnerships for developing innovative products and solutions of sustainable energy. There were also positive signs that the Indian government has invited foreign investors, especially Emiratis, to pump funds not only into the infrastructure projects, but also into manufacturing and rail sectors.
From a foreign policy and regional security perspective, the UAE pays due attention to regional security in Asia, therefore it places India at the forefront of its international partnerships and recognises the importance of broadening a comprehensive dialogue with India that deepens and diversifies areas of engagement. There are particularly strong opportunities for UAE-India security cooperation in combating terrorism.
In the media sector, cooperation between the two countries dates back to 1981, when the United News of India (UNI), one of the largest multilingual news agencies in India, opened its office in Abu Dhabi and signed a cooperation agreement with the state-run Emirates News Agency (WAM) for news exchange. Another leading news agency in India, the Press Trust of India (PTI), also inked a similar agreement with WAM in 2000.
Culturally, the UAE and India share age-old cultural ties which have been further strengthened by regular cultural exchanges and frequent interactions between the two friendly countries which are making sincere efforts to cultivate regular cultural exchanges both at official and people-to-people levels. The Cultural Agreement of 1975 provides the basic framework for cooperation to bring Arab and Indian cultures closer together. The UAE’s Ministry of Culture, Youth and Community Development and other cultural organisations, such as Abu Dhabi Tourism and Culture Authority, (TCA), have been close partners in organising Indian cultural events including film festivals and art exhibitions.
Kalima, a TCA ambitious, non-profit initiative which funds the translation, publication, and distribution of high-quality works of classic and contemporary writing from other languages into Arabic, has translated and published a collection of some prominent Indian books, mainly culture and heritage.
Likewise, QALAM, another initiative of TCA, and in collaboration with India Arab Cultural Centre of Jamia Millia Islamia, launched a joint cultural project to translate masterpieces of Emirati literature from Arabic to Hindi and Urdu.
The two countries also agreed to form a Joint Working Group for cooperative research on subjects of mutual interest, exchange and training of scientific personnel, exchange of technologies and data, organisation of workshops and seminars, and transfer of know-how and equipment on a non-commercial basis.
Dubai International Financial Centre (DIFC) aims to increase the number of Indian firms listed to more than 100 within the next 10 years. DIFC has seen exponential growth from only one Indian institution in 2007 to over 20 Indian banks and financial institutions at present. Discussions are ongoing with 10 leading Indian banks regarding their setting up in Dubai's financial hub.
Indian institutions now make up the third largest community of financial firms at the financial centre. Furthermore, more than a quarter of the current workforce employed in DIFC is of Indian origin.
The drive to attract more businesses follows Indian Prime Minister Narendra Modi’s visit to the UAE in August 2015, the first for an Indian prime minister since Indira Ghandi’s visit in 1981, to strengthen the relationship with the Gulf countries and seek investment to boost the Indian economy.
Trade and investment ties between India and the UAE will continue to grow following a pledge made by Prime Minister Modi and UAE government officials to increase bilateral trade by 60 percent over the next five years.
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, paid several state visits to India between 2007 and 2011 for talks focused on broadening prospects of economic cooperation between the two countries.
The visit of the Indian Prime Minister to UAE in August 2015, the first for 34 years, marked the beginning of a new and comprehensive strategic partnership between India and UAE in a world of multiple transitions and changing opportunities and challenges.
Mr. Modi held extensive talks with His Highness Sheikh Mohammed bin Rashid Al Maktoum, the UAE Vice President Prime Minister and Ruler of Dubai, and His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces.
During the talks, His Highness Sheikh Mohammad Bin Rashid Al Maktoum reiterated the deep-rooted historical relations that bind the UAE and India, and the two leaders explored ways to strengthen the friendship and cooperation on strategic grounds that ensure the interests of both countries and people.
His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, also held talks with India's Prime Minister about ways to enhance bilateral ties of friendship and cooperation and exchanged views on a variety of regional and international issues of mutual interest.
Sheikh Mohamed said that the UAE was looking forward to scale friendly bilateral ties to new, ambitious heights at all levels. He added, "Your Excellency's interest in visiting the UAE is a true expression of the bonds of friendship and fruitful bilateral cooperation as well as the common vision towards a wide range of regional and international issues. We also share with you this interest, given your country's important role in international politics and global economic growth."
Sheikh Mohamed highly valued the contributions of the resident Indian community to the development of many sectors in the UAE. "The Indian community has made significant contributions to the process of building the country and the development that the UAE is witnessing. It is a natural extension of age old bonds between the Indian subcontinent and the Arabian Gulf."
As they exchanged views on a wide range of regional and international topics of mutual interest, the two sides emphasised their mutual desire to build more solid and robust ties.
Modi’s UAE trip produced significant strategic economic and political indicators as India views the UAE as a major economic powerhouse in the Arab World and a favourite market for Indian migrant workers. For its part, the UAE considers its strategic relations with India one of its foreign policies priorities.
The prime minister's visit was of strategic significance in bilateral relations and followed on the heels of growing diplomatic, economic, energy and defence cooperation between the two countries.
From a foreign policy and regional security perspective, the UAE has placed India at the forefront of its international partnerships and recognises the importance of broadening a comprehensive dialogue with India that deepens and diversifies areas of engagement.
Modi's visit to the United Arab Emirates in August 2015 at the invitation of His Highness Crown Prince Mohamed bin Zayed AI Nahyan, delivered a paradigm shift to the millennia old ties of friendship and cooperation bilateral and marked yet another milestone in the history of both UAE and India.
A Joint India-UAE statement issued at the end of the state visit said that an extensive framework of agreements, including economic, defence, security, law enforcement, culture, consular and people-to-people contacts constituted solid bedrock for elevating bilateral cooperation across the full spectrum of the relationship, and that His Highness Sheikh Mohamed bin Zayed Al Nahyan and Prime Minister Shri Narendra Modi agreed to seize the historic moment of opportunity and shared responsibility to chart a new course in their partnership for the 21st century. The leaders agreed to elevate the India-UAE relationship to a comprehensive strategic partnership.
People-to-people are at the heart of India-UAE relations and both governments will continue to nurture these relations and ensure the welfare of their citizens, especially the workers, in each other's countries.