Complex interdependencies in international politics have been a hallmark of many bilateral ties. But when one analyses the ties shared by India and the United Arab Emirates (UAE), it goes beyond the prism postulated by Robert Keohane and Joseph Nye to describe the emerging nature of the global political economy in a rapidly changing world.
Deep socio-political and maritime bonds shared by the Arab nation and India go well beyond the time even before the UAE came into existence in 1971. The middle power which holds a strong influence in the UN, Arab League, Organisation of Islamic Cooperation, OPEC, and the Gulf Cooperation Council has been an all-weather ally of India in world politics.
Jammu & Kashmir’s Development
The UAE is also emerging as a major partner in Jammu and Kashmir’s development. In the past few months, the Union Territory has signed a slew of Memorandums of Understanding (MoUs) with Abu Dhabi to build strong business relations.
In October 2021, the first MoU was signed between the two governments to develop real estate, industrial parks, super-specialty hospitals among others.
In December last year, the J&K administration signed an MoU with University College Birmingham (UCB) Dubai to explore potential progression opportunities through institutional partnerships with vocational colleges and universities in Kashmir.
The UCB would set up an office in J&K to tie up with the local educational institutions, facilitating academic exchange programs while enabling students to secure admissions at reduced fees in the Middle East.
On January 5, 2022, the Union Territory signed a historic agreement with Dubai-based LuLu Group to set up a food processing & logistics hub in Srinagar. The agreement was aimed at further expanding Jammu & Kashmir-Dubai collaboration.
The MoU with the LuLu Group would help the products from J&K to reach shoppers at 190 LuLu Hypermarkets across the Gulf countries and Egypt.
Why UAE’s Investment In J&K Matters
The UAE making an entry into Jammu and Kashmir for the first time in the past 70 years is also a recognition of New Delhi’s policy to scrap Article 370 that gave special powers to the erstwhile state.
The UAE venturing into Jammu and Kashmir is a signal to Pakistan which has been harping on the propaganda about Kashmir being a problem that needs to be settled and Muslim countries should support its argument.
By coming forward, the UAE has sent a strong message to the OIC that it should focus on building strong relations with India rather than getting swayed by the narrative built by Pakistan.
Incidentally, the UAE was one of the first countries that had responded favorably to India’s decision to scrap Article 370 of the Constitution in 2019.
UAE’s ambassador to India, Dr. Ahmed Abdul Rahman Al Banna, said that from his understanding, the reorganization of the state was not a unique incident in the history of independent India and that it was mainly aimed at reducing regional disparity and improving efficiency.
He viewed New Delhi’s decision related to Jammu and Kashmir as an “internal matter” as stipulated by the Indian Constitution.
Experts have called it a masterstroke on the diplomatic as well as the political front. The UAE investment in J&K is also a validation of OIC’s backing for the Indian government’s Kashmir policy. It is a major setback for Pakistan as the neighboring country has been mobilizing the OIC on the Kashmir issue.
Tectonic changes in the domestic policies of the seven Emirates have made UAE the hub of trade, commerce, and development in recent times. According to the Ministry of External Affairs, of the 32 million Indians living abroad, nearly 3.5 million reside in the UAE, making it the highest.
The dependence between UAE on India is incomparable with any other country in the world. Figure this, of 9.99 million residing in UAE, the Indian diaspora amounts to 27.49% of the population.
In 2019, five Indian expats from the UAE made it to the Forbes billionaires list with a combined worth of $15 billion. Yusuf Ali topped this list with assets of $4.7 billion, followed by Micky Jagtiani, Sunny Varkey, PNC Menon, and BR Shetty of NMC Healthcare, who own two floors in Burj Khalifa, the world’s tallest skyscraper.
Besides a steady flow of skilled manpower to the UAE, Indians are amongst the top three nationalities investing in property in Dubai. In 2019 alone, Indians contributed 16% of the housing sales to Dubai sales by volume – injecting more than $2 billion into the sector.
The mutually beneficial relationship is epitomized by the sheer volume of remittances that come from the UAE to India. According to World Bank data, Indians contributed 33.6 percent or $14.75 billion back to their homeland.
Massive Trade Ties
India-UAE bilateral trade amounting to $43,318 million makes the third-highest after the US and China. As for the UAE, India is the second-largest trading partner after China.
The volume of the bilateral trade between India and the UAE is tipped to increase from $60 billion to $100 billion in the next 5-8 years in tune with the growing partnership between the two countries.
Elaborating on the potential of collaboration between India and the UAE, Dr. Al Banna, the UAE ambassador in India, said, “India is the second-largest trading partner for the United Arab Emirates and UAE is the third-largest trading partner for India after the United States of America and China.
Our total Foreign Trade figures reached about $60 billion in 2019-2020. The Comprehensive Economic Partnership Agreement (CEPA) between the United Arab Emirates and India will be crucial in deepening the ties between India and UAE. We are hoping that CEPA will increase our bilateral trade from $60 billion to $100 billion in the coming 5 to 8 years”.
Modi Government’s UAE Focus
Narendra Modi became the first Indian prime minister to visit the UAE in 30 years when he embarked on a tour of the country in 2015. He followed it up with visits in 2018 and 2019. His scheduled visit in 2022 was put off due to the rising case of Omicron in India.
The two nations were supposed to sign a partial FTA (free trade agreement) after formal talks were launched in September between India’s Commerce and Industries Minister Piyush Goyal and UAE Minister for Foreign Trade Thani bin Ahmed Al Zeyoudi.
Civil aviation officials have been working separately on an updated Bilateral Air Services Agreement that would allow more flights between Indian and the Emirati airports, but have failed to conclude talks thus far.
Apart from bilateral talks with UAE’s Sheikh Mohammed bin Rashid Al Maktoum, Prime Minister Narendra Modi was also due to discuss multilateral cooperation in a number of areas.
These include the India-Israel-UAE-US quadrilateral economic partnership that was announced during External Affairs Minister S Jaishankar’s visit to Israel in October, as well as coordination at the UN Security Council, where the UAE will begin its non-permanent term on January 1.
The ties between India and the UAE, besides being reciprocal is also mutually beneficial to the interests of both countries.