Is the Sky the Limit for India-UAE Ties? Modi’s Fifth Visit to the Emirates

It is undeniable that the emerging trajectory of relations between India and a few key Gulf Cooperation Council (GCC) states have become one of the most successful stories of the current foreign policy of the Narendra Modi-led government since mid-2014. This has been evidenced by the improvements in the overall bilateral ties with most of the member states of this regional bloc. Alongside the visible growth in the political ties, which have become a significant phenomenon, the economic importance of the Gulf region is testified by the voluminous trade, which is being conducted between India and the GCC, which is also New Delhi’s largest trading partner bloc. The bilateral trade volume reached US$154 billion [3] in the FY 2021-2022. It is within this ambit that the United Arab Emirates (UAE) is fast emerging as one of India’s strongest external partners, with whom relations are soaring by leaps and bounds, both in traditional and non-traditional security sectors. From the recent developments, it is discernible that these two countries are making strenuous efforts to strengthen their strategic partnerships on all the fronts. This piece briefly highlights some of the emerging trends in the Indo-Emirati ties, with a focus on the maturation of the economic cooperation, priorities given towards building academic collaborations, and tellingly, the nascent bilateral engagements in the renewable energy sector and climate change. Until a few years ago, these are a few spheres which remained less discussed aspects of India’s West Asian policy, let alone the Gulf region.

For the Indo-Emirati ties, the signing of the Comprehensive Strategic Partnership Agreement [4], considered as a milestone, during the visit of Crown Prince of Abu Dhabi, Sheikh Mohammed bin Zayed Al Nahyan or commonly known as MbZ to India in January 2017 has provided both sides with favourable opportunities to engage in multiple domains. Prior to this, coincidental developments, particularly Modi’s thumping electoral victory and the appointment of MbZ as the de-facto ruler of Abu Dhabi, both in 2014, have played instrumental role in ushering a new era in the Indo-Emirati ties. Certain commonalities of interests and shared strategic visions of these two leaders to not only enhance the bilateral ties in conventional domains but also to cooperate in newer issues and global goods have widened the scope for cooperation and partnerships in several avenues, lately. The manner in which India engages with the UAE reflects the significance of the country from the standpoint of its security, energy and economic security calculus. At this juncture when India is diversifying its sources for its oil and energy imports, the UAE remains one of its top crude oil suppliers from the region, and the Emirates is the former’s third largest trading partner. In 2022, the bilateral trade volume touched US$85 billion [5], and the figure is likely to grow in the coming period, particularly as both countries signed the Comprehensive Economic Partnership Agreement [6] (CEPA) in February 2022, which entered into force on 1 May of the same year. As it is, there has been a 15 per cent [7] increment in the bilateral trade since this economic breakthrough last year. The CEPA, thus, has broadened the scope and prospects for enhancing the trade, investment and financial cooperation between the two countries. Looking at this speedy progression, it is a matter of time when the bilateral trade will likely reach a whopping US$100 billion mark, as desired by both sides.

Now, the recently concluded visit (on 15 July 2023 [8]) to the UAE by the Indian Prime Minister, for the fifth time, has clearly demonstrated the importance accorded by New Delhi towards scaling up the existing ties with Abu Dhabi. This visit happened at a time when there is also a wide consensus, particularly within the Indian strategic community and also internationally, that India’s UAE policy could be considered as one of his government’s most effective foreign policy strategy. The nature of the three agreements inked during this one-day visit has also indicated the strong interests to solidify the bilateral economic and commercial engagements between two economically growing countries from the respective regions. Further, in what could be considered as setting a precedent, India and the UAE have signed a agreement to establish a framework for the promotion of local currencies to facilitate cross-border transactions [9], with a strong likelihood to be followed suit in other countries, too.

In the current global order, mechanisms like the Rupee-Dirham payment system holds immense importance, as various countries in other parts of the world are also contemplating a similar approach to conduct trade using their own currencies. This has been a widespread discussion triggered in the wake of the ongoing Russia-Ukraine conflict. Nations, as a result, are now looking for alternative channels for payments, a move which has also been considered as a gradual step towards ‘de-dollarisation’, although fruition on a global scale will take a considerable time. Increasingly, there is a debate for the need for an alternative to the current globally used system, SWIFT (Society for Worldwide Interbank Financial Telecommunication). For India and the UAE, the linkage that has been established between the former’s Unified Payments Interface (UPI) [10] and the Emirati’s Instant Payment Platform (IPP) would promote trade, investments and, most importantly, smoothen the inflow of remittances from the expatriate community to India, which continue to contribute immensely in the improvement of bilateral economic ties. It is also likely that this latest Indo-Emirati trade pact could encourage other major economies from the Gulf region, particularly Saudi Arabia, to enter into a similar system with India. As it is, discussions in this regard had begun during the meeting of the India-Saudi Arabia Strategic Partnership Council [11] held in September last year.

With utmost importance given towards augmenting cooperation in the science and technology field, the recent visit of the Indian leader had also resulted in the signing of a Memorandum of Understanding (MoU) to set up a campus of the prestigious Indian Institute of Technology (IIT) in Abu Dhabi [12]. For India, this is an important step, considering the objective and the efforts of the current government towards the internationalisation of the Indian education, which is integral to its New Education Policy [13] adopted in 2020. Moreover, the approval granted by the said government in September 2022 to sign an India-UAE MoU [14] in the education sector should strengthen and widen the scope of collaborations between the two, also creating employment opportunities for the respective citizens. These timely developments bode well for both the countries which are striving to extend their bilateral cooperation to education, academic as well as innovation and technology, and not letting the ties to be dominated by the traditional oil-energy and commercial engagements.

Taking a step forward, India and the UAE are currently forging partnerships in the energy domain, but in a relatively new area – renewable energy, notwithstanding the robust hydrocarbon-based cooperation. This has been necessitated by the growing scourge of global warming and consequences of climate change. It is, therefore, a noteworthy strategic step that India has invited the UAE to be a Guest Country [15] at the G20 Summit to be held in September 2023 in New Delhi, aimed towards boosting cooperation in areas pertaining to sustainable development, climate change, economic security, etc. The urgency to address collectively the global concerns regarding climate change has been signified by the fact that a joint-statement on ‘climate change’ [16] was issued separately during the discussed visit of Modi to the UAE, recently. Amongst many issues, the “cooperation on climate ambition, decarbonization, and clean energy” were high on the agenda of discussions.

As it is with India, the UAE depends on thermal power for the generation of most of its electricity, which, in 2021, accounted for 92.6 per cent [17] of its total electricity generation. To reverse this pattern and especially to mitigate challenges emanating out of environmental degradation (as a result of rapid climate change), it however, has planned strategies to lessen the dependency on this medium and opt for clean energy, with an aim to meet 30 per cent of its power needs using clean energy by 2030. This is precisely the reason why the UAE is investing heavily in the establishment of gigantic solar parks in the country to produce clean energy from renewable sectors, mainly solar, and simultaneously is in quest for partners to jointly collaborate in the same sector. Initiatives by India and the UAE to use solar energy began sometime in 2021 when technical experts from both countries started to discuss the possibilities for cooperation for a sustainable future [18]. Subsequently, a foundation for cooperation was laid in January 2023, with the signing of a MoU pertaining to the green hydrogen [19] and laying of the undersea cable to connect the two countries. What has also made cooperation in this domain potential is the interest shown by Masdar [20], one of the UAE’s largest investors in renewable energy to “explore all opportunities of partnership with India to contribute to its high-growth-low-carbon pathway.” Suffice to mention that commonality and shared interests to generate electricity using non-renewable sources, to mitigate challenges posing by climate change, and to achieve the net zero emissions by 2070 (for India) and 2050 (for the UAE) will lead to strengthening of cooperation and partnerships in the upcoming period.

The emerging developments in some of the aforementioned fields are indicative of the transformations that have come about in the overall India-UAE bilateral ties, particularly during the last eight years. The convergence of interests as well as the existence of political goodwill of the respective leaderships has been the attributing factors for this paradigm shifts in their ties. This is imperative for these two countries which have their own ambitions to become self-reliant, technological hub, economic power and also for the holistic growth and development.

Importantly, the gradual geopolitical realignments in the wider West Asian region also offers India a favourable opportunity to establish trilateral or mini-lateral partnerships, involving the UAE and like-minded countries, in a few areas, such as renewable energy, climate change, food security, apart from traditional security realms. There are already potential players in the region and beyond, sharing cordial relations with India and the UAE and they include Israel, Saudi Arabia, Bahrain, France in Europe and countries like Japan in East Asia. Most of these countries are currently dealing bilaterally with India and the UAE in the mentioned sectors, and, as a result, the time appears to be ripe to explore the possibility of forging partnerships. The growing convergences of interests, therefore, have potential to pave the way for the furtherance of cooperation not only between India and the UAE, but also with these external partners. Finally, when it comes to the Indo-Emirati ties, the sky seems to be the limit, and their relations are certain to see further progresses and growth in the times to come.

(The paper is the author’s individual scholastic articulation. The author certifies that the article/paper is original in content, unpublished and it has not been submitted for publication/web upload elsewhere, and that the facts and figures quoted are duly referenced, as needed, and are believed to be correct). (The paper does not necessarily represent the organisational stance... More >>