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“Partners in Progress”: The Transformation of the India–UAE Relationship

Prasanta Kumar Pradhan
Dr Prasanta Kumar Pradhan is Research Fellow at the Manohar Parrikar Institute for Defence Studies and Analyses, New Delhi. Click here for profile

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    Prasanta Kumar Pradhan
    February 20, 2024

    Summary

    India–UAE relations have witnessed remarkable growth since 2014, with Prime Minister Narendra Modi visiting the Emirates seven times. The relations encompass trade, investment, energy, technology, defence and security cooperation at the bilateral level. Both countries are also essential elements of mini-lateral groupings like the I2U2, along with the United States and Israel.

    Introduction

    Under the leadership of Prime Minister Narendra Modi since 2014, India's interaction with the UAE has witnessed a remarkable expansion across various sectors. The UAE has emerged as the most important pillar of India’s outreach to the Gulf region. While India’s ‘Think West’ policy has prioritised India's engagement with West Asia, its relationship with the UAE has outpaced India’s relationships with other countries of the region. Modi’s seventh visit to the UAE during his tenure of 10 years as Prime Minister reflects a personal initiative and efforts to strengthen the relationship. The scope and intensity of engagement between the two countries can be measured by Modi's statement that “India and the UAE are partners in progress.”1   

    Trade, Investment and Energy

    An important element of India’s engagement with the UAE is the constant growth in bilateral trade and investment. Although economic engagement remains the conventional mode of interaction between the two, its pace and scope have expanded significantly in recent years. The UAE remains the third largest trading partner of India after the US and China. In the last 10 years, bilateral trade figures have increased from US$ 59.5 billion in 2013–2014 to US$ 84.8 billion in 2022–2023.2

    Bilateral trade received a big boost after both countries signed the Comprehensive Economic Partnership Agreement (CEPA) in 2022. As part of the CEPA, the existing UAE–India Bilateral Investment Agreement signed in December 2013 would be replaced with a new council called the UAE–India Technical Council on Investment and Trade Promotion. The main objectives of the Council are to enhance bilateral trade, facilitate investment and remove trade barriers between the two countries. In May 2023, on the first anniversary of the signing of the CEPA, the government of India noted that the bilateral trade has grown from US$ 72.9 billion in 2021–2022 to US$ 84.8 billion in 2022–2023, which is an increase of 16 per cent.3

    There is a remarkable growth in the foreign direct investment (FDI) received by India from the UAE. In his meetings with the Gulf leaders, Prime Minister Modi has always appealed to them to invest in India. India realises that the oil-rich Gulf monarchies have huge sovereign wealth funds (SWF) and they have the capacity to invest in India. Modi has engaged with them and assured them to provide a secure investment environment in India.

    In multiple visits and meetings with the Gulf leaders, Modi has been successful to a large extent in inviting FDI from the region. FDI from the UAE remains the highest and covers multiple sectors such as telecom, infrastructure, energy, etc. At present, the UAE is the 7th largest investor in India. From April 2000 to December 2022, the UAE has invested over US$ 15.32 billion in India in different sectors.4 Modi government’s ‘Make in India’ policy and its focus on the ‘Ease of Doing Business’ environment has improved India's standing in the ease of doing business index from 142 in 2014 to 79 in 2020.5

    The UAE is also a major oil supplier for India and a major partner for India’s energy security. It is a crucial country for India’s Strategic Petroleum Reserve (SPR). In January 2017, during Modi’s visit to the UAE, the Indian Strategic Petroleum Reserves Ltd (ISPRL) and the UAE’s Abu Dhabi National Oil Company (ADNOC) signed agreements for crude oil storage in the Mangalore facility.6 The UAE is the first country to join India’s SPR programme. In 2022–23, India imported crude oil worth US$ 16.84 billion from the UAE which is a huge jump since the last five years when the imports from the UAE was US$ 6.12 billion.7

    Technology and Innovation

    India–UAE engagements under Modi have moved beyond the conventional areas of cooperation with the emergence of new and emerging areas. Technology and innovation have emerged as key areas of cooperation between India and the UAE. India has a robust IT sector which continues to expand. It has a strong presence in the UAE. Cooperation on IT between the two countries today spans several sectors including energy, health and finance. As both countries have experienced cyber-attacks, cooperation to combat cybercrimes has emerged as a crucial area of concern. In 2016, India and UAE signed a MoU on Technical Cooperation in Cyber Space and Combating Cyber Crime.

    Integrating financial systems and collaboration in financial technology have emerged as important aspects of cooperation. During Prime Minister Modi’s visit to UAE in February 2024, both countries signed MoUs for the introduction of India’s RuPay card and the Unified Payments Interface (UPI) transaction system which would facilitate seamless payment. It is a big leap forward between the two countries. Collaboration between the fintech companies and financial institutions in both countries is steadily increasing.

    Cooperation on smart cities and related infrastructure between the two countries is also growing.8 India has announced to establishment of 100 smart cities throughout the country with infrastructure facilities for a better quality of life. India–UAE cooperation in the Smart City projects would attract investment and knowledge sharing between the two.

    There are talks about cooperation in the new and emerging fields such as ‘creation of the Fast Track Mechanism to facilitate Indian investment into the UAE’, ‘India-UAE Start-Up Bridge’ which is a joint collaboration between the two governments for training and knowledge sharing on the issue and the establishment of Abu Dhabi–India Virtual Trade Corridor by developing data exchange system and to promote paperless trade.9

    Besides, India and the UAE have agreed to cooperate in the area of space exploration. Interaction between the two sides in this regard has increased since the signing of the MoU between the Indian Space Research Organisation (ISRO) and the United Arab Emirates Space Agency (UAESA) in 2016 for ‘exploration and use of outer space for peaceful purposes’.10 The UAE is determined to be a space power and has sent its astronauts to space. In July 2020, the UAE became the first Arab country to launch a Mars mission named ‘Hope Probe’ and is planning to send a lunar mission soon as well. In 2017, UAE’s Nayif-1 nanosatellite was launched by ISRO.11 In December 2022, India participated in the Abu Dhabi Space Debate hosted by the UAE.

    Renewable energy cooperation between the countries is increasing and both are exploring investment and technology collaboration in areas such as green hydrogen and solar energy. The UAE fully supports the Indian initiative of the International Solar Alliance (ISA). Located in a desert topography, the UAE is keen to tap into the solar energy. It has expressed its seriousness about working towards a net zero carbon emission. India’s initiative of “one sun, one world, one grid” that emphasises cross-border renewable energy has found resonance with the UAE. Such cooperation stems from the convergence of ideas and thinking on the issues from both sides. 

    Defence and Security Cooperation 

    Defence and security cooperation between India and the UAE has significantly strengthened. Both countries hold similar concerns on security issues in their respective neighbourhoods. Issues such as terrorism, piracy, safety of sea lines of communication, illegal drugs and arms peddling, money laundering, etc., are some of the key issues of concern for both countries.12 The turbulences in the West Asian region following the beginning of the Arab unrest, spread of terrorism, emergence of the ISIS caliphate, civil wars in the region, etc., are some of the key factors which drew both countries towards each other to further strengthen their engagements on defence and security issues.

    A MoU on defence cooperation was signed in 2003 and another MoU on security cooperation was signed in 2011. Defence cooperation between the two countries includes training, joint naval and air exercises, exchange of high-level visits and participating in defence exhibitions among others. During his visit to the UAE in 2014, Prime Minister Modi emphasised strengthening defence cooperation, including the manufacture of defence equipment in India. Both countries also emphasised strengthening cooperation on terrorism, counterradicalism, intelligence sharing, cyber security and maritime security.

    Both countries also agreed to elevate the relationship to a ‘comprehensive strategic partnership’, and establish a ‘strategic security dialogue’.13 Since then, the India–UAE cooperation in defence and security fields has continued to grow. The UAE has expressed its interest in buying BrahMos missiles.14 Besides, it is also interested in Akash missiles15 and the Light Combat Aircraft (LCA) Tejas from India. In Exercise Desert Flag-8 held in UAE in February–March 2023, LCA Tejas aircraft was introduced for the first time by India in an international air exercise.16 Joint production and development of technology remains a common objective for both the States but efforts in this direction need to be accelerated. 

    Counter-terror cooperation has significantly strengthened. Terrorists wanted in India accused of being involved in terror activities have been deported from the UAE. This is regarded as a huge success in the security and counter-terror cooperation between the two countries.  

    Multilateral Engagements  

    Beyond the bilateral convergence of interests, India and the UAE have been successful in joining hands together in multilateral engagements. The formation of the India–Israel–UAE–US (I2U2) grouping has been an example of a successful minilateral engagement involving India and the UAE. The Abraham Accords, signed between Israel and the Arab Gulf countries like the UAE and Bahrain in 2020, proved to be a boon for India. The signing of the Abraham Accord marked a crucial turning point in the historically complex relationship between Israel and the Arab countries. This facilitated the formation of the I2U2 minilateral along with Israel and the US.

    Under the I2U2 agreements, the UAE will be investing US$ 2 billion in India to establish integrated food parks which will help to address food security issues.17 The I2U2 grouping focuses on cooperating on technology, energy, food and water security, agriculture, etc. The I2U2 minilateral, formed in the aftermath of the signing of the Abraham Accords that normalised the relationship between Israel and the UAE, is also relevant from the point of contributing to regional harmony and peace.

    India invited the UAE as a guest country during its G20 presidency. The UAE participated in several meetings held in different parts of India. Importantly, the UAE is a part of the India–Middle East–Europe Economic Corridor (IMEC) which is a trade and transit corridor which would connect India, West Asia and Europe. The IMEC further enhances UAE’s importance for India as it would be the most important point of contact which will be connected to India via the sea route. Besides, such projects ensure a long-term economic interdependency and transit corridor between the two countries. During Modi’s visit to the UAE in February 2024, a MoU on Inter-Governmental Framework Agreement on the India–Middle East–Europe Economic Corridor was signed between the two which marks a progress towards achieving the goal.

    Tolerance and Accommodation

    The UAE has practised tolerance and an accommodative approach towards other religions and cultures. The country has a Ministry of Tolerance and Coexistence whose objectives are to promote the values of tolerance, pluralism, inclusion, peace and coexistence; and reject extremism, violence and discrimination.18 This has emerged, over the years, as an important element of the country’s interaction with the outside world. While maintaining its own Islamic identity, the Emirati approach of accommodating other cultural practices in the country has struck a chord with Prime Minister Modi.

    India’s traditional motto of Vasudhaiva Kutumbakam (The World Is One Family), which was further amplified during India’s G20 presidency, also shares the same outlook and philosophy of mutual coexistence between different religions, cultures and peoples. In this regard, the inauguration of the first Hindu temple in Abu Dhabi by Prime Minister Modi in February 2024 reflects an inclusive and humanistic approach of the UAE, sending a positive signal on the overall bilateral relationship between the two countries.

    The presence of the 3.5 million strong Indian diaspora in the UAE forms a natural link between the two. The contribution of the Indian community towards the development and progress of the UAE has been acknowledged by the UAE.19 The Indian workers are known to be hard-working and law-abiding and have integrated themselves well into the fabric of the Emirati society. Earlier Modi has stated that Indians are ambassadors of Indian culture abroad. Besides, India’s rich cultural diversity including festivals and cuisines has appealed to the Emirati society which nurtures the bond between the two. 

    Cooperation during COVID-19 Pandemic

    As the COVID-19 pandemic spread, both countries came forward to support each other by providing the resources available to them to combat the virus. India supplied medicines and medical equipment to the UAE in 2020. Upon the request of the UAE government, India also sent a team of doctors and healthcare professionals to help the UAE fight the pandemic.20 The UAE among other countries provided medical supplies and liquid oxygen to India in 2021.21 India also provided vaccines to the UAE. The UAE cooperated with India in the repatriation efforts of India to bring back its nationals under the Vande Bharat Mission. Since then cooperation in the healthcare sector has emerged as an important aspect of engagement between the two countries.

    Conclusion

    Convergences of interests and a mutually beneficial partnership have significantly reshaped the India–UAE relationship. Perception of the leaders and people towards each other has played a key role in the new collaborative efforts between the two. The UAE perceives India as an emerging global political and economic powerhouse, growing in science, technology, innovation and industrialisation.

    For India, the UAE is a stable country with a vibrant economy and a positive outlook towards expanding and acquiring knowledge on science, technology in niche areas, innovation and renewable energy. Besides, there is a convergence between the two on the issues of climate change, water and food security as well as in fighting common security threats, such as terrorism, extremism and maritime piracy.

    The transformation of the India–UAE relationship under the leadership of Prime Minister Modi has been remarkable. The recent trends reflect a sustained engagement between the two countries on the conventional issues and, at the same time, efforts to find convergence in the new and emerging areas of cooperation. This approach has been pivotal in the transformation of the India–UAE relationship.

    Views expressed are of the author and do not necessarily reflect the views of the Manohar Parrrikar IDSA or of the Government of India.

    Keywords: 
    India-UAE Relations

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