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Modi’s visit to UAE: Strengthening India’s Gulf link

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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  • August 24, 2015

    UAE is one of India’s important partners in the Gulf region. The India-UAE relationship has continued to grow with a number of crucial connections such as trade, energy, diaspora and culture. In the contemporary era, changing geopolitics and growing security challenges in the region have drawn the two countries even closer. Importantly, there are no major issues of conflict hindering further consolidation of ties. UAE looks towards India as an emerging global power with a large economy, while India has been attracted by the UAE’s huge economic potential and its role as a reliable and active player in the region to collaborate on security issues especially terrorism, piracy and other transnational crimes. The recently concluded visit of Prime Minister Narendra Modi to the UAE on August 16-17, 2015 addressed many important issues, most notably India’s economic, security and strategic concerns.

    For India, the UAE’s most critical importance lies in the field of trade and business. UAE is India’s third largest trade partner (after China and the USA), with bilateral trade standing at over USD 59 billion in 2014-15.11 However, what has not been satisfactory is the investment scenario. According to the Department of Industrial Policy & Promotion (DIPP), from April 2000 to June 2015 UAE investments in India totalled USD 3.12 billion. This is far below the UAE’s investment potential considering its enormous Sovereign Wealth Fund (SWF) of about USD 773 billion, which India intends to attract. The investment climate in India is known to be unappealing for foreign investors and would remain a major impediment for attracting greater investments from the UAE. With his visit and meetings with the UAE leadership, Prime Minister Modi has tried to instil confidence in their minds about the vast opportunity of investing in India.

    UAE also plays an important role in fulfilling India’s energy needs. India imported around 16 million tonnes of crude oil from UAE in the year 2014-15.22 India believes that the UAE can be an important partner in developing its strategic petroleum reserves. With its growing demand of energy and concerns about disruptions in production and supply, India seriously feels the necessity of developing a strategic petroleum reserve. It plans to create five million metric tons (MMT) of underground reserves in the country. UAE has a proven reserve of 97.8 billion barrels33 of crude and India intends to tap this potential for its strategic petroleum reserves. Promoting a strategic partnership in the energy sector with the UAE is indeed a step in the right direction.

    The emergence of the Islamic State (IS) has been a challenge for the whole region. The IS’s declaration of a ‘caliphate’ in June 2014 by carving out territories from Iraq and Syria and the spread of its activities to the Gulf region has alarmed Gulf countries including the UAE. India has also expressed concern over the growing activities of the IS. Some Indian nationals have been kidnapped by the IS in Iraq and Libya. To the worst fears of India, some Indian youths have joined the group. Though they are only a few in number, India is concerned about the radicalization of its youths. Thus, India and UAE have a common issue in countering terrorism and radicalisation. Cooperation in this regard will further enhance bilateral ties. In this regard, it needs to be noted that UAE has in the past cooperated with India by deporting an Indian Mujahideen terrorist Faizan Ahmed.

    Similarly, both India and UAE have been victims of piracy in the Arabian Sea. The importance of maritime security for both countries can be understood from the fact that around 95 per cent of India’s trade by volume and 68 per cent by value is transported through the sea route44 and Dubai is an international transit hub. Thus, for both, piracy disrupts their national economies. Since 2008, India has continuously deployed ships in the Gulf of Aden to prevent pirate attacks. UAE has called for robust coordination and cooperation by the international navies against piracy. UAE’s reiteration of its commitment to join hands with India in the fight against terrorism and piracy brings it even closer towards India.

    In the joint statement issued during the Prime Minister’s visit, both countries have agreed to strengthen bilateral defence cooperation including the ambition of joint manufacture of defence equipment in India. India and UAE had signed a defence cooperation agreement in 2003, with the aim of providing military training, arms import and export, peacekeeping operations, military medical services, security and defence policy and joint scientific research on defence, among other issues. Joint defence production would be a major boost to defence ties. Though regular defence cooperation in the form of training, joint exercises, goodwill visits, information sharing etc. continues, the issue of joint production of defence equipment remains a challenge as it requires both large sums of investment and technical know-how.

    Modi’s visit to the UAE comes at a time when the region is witnessing major upheavals in its security and strategic scenario. Continuing instability in Iraq, Syria, Yemen and shifting geopolitics involving the P5+1 nuclear deal with Iran are some of the issues that are affecting countries of the region. Regional security in the Gulf region is an important concern for both India and the UAE. It directly affects the physical security of the UAE while India’s interests are affected by the turbulence in the region. Steep rise in oil prices in 2011, the safety of around seven million Indian nationals living in the region, the spread of radicalization are some of the major concerns for India. Though India has chosen to keep itself away from the complexities of the region’s geopolitics, its economy and security are closely tied with that of the Gulf region which India cannot afford to overlook. Thus, a proactive engagement with the UAE and other countries of the region is necessary without being intrusive and intervening in the internal affairs of the countries of the region.

    The depth of the India-UAE relationship can be measured from the fact that both countries have signed a number of agreements including on trade, labour, culture, security and so on in the past. The joint statement further reinforces the commitment from both sides on a wide range of bilateral issues. Modi’s visit has tried to build upon the strong foundation laid by India in the last couple of decades. Both countries deciding to take the bilateral relationship to the level of a ‘comprehensive strategic partnership’ is also a big leap forward. Given their shared concern about a number of issues highlighted above, joint efforts in addressing these will be beneficial for both.

    Modi’s visit to UAE needs to be seen in the larger context of strengthening ties and further widening the scope of India’s engagement with the Gulf region. In recent years, India has taken initiatives to engage with other countries of the region and has opened multiple fronts of engagement with them. The declaration of strategic partnerships with Saudi Arabia in 2010 and with Oman in 2008, and the agreement on defence and security cooperation with Qatar in 2008 are some of the high points in India’s engagement with the region. In this context, Modi’s visit to UAE, besides boosting bilateral relations with the UAE, would provide further impetus to India’s engagement with the Gulf region.

    • 1. Export Import Data Bank, Ministry of Commerce, Government of India.
    • 2. Export Import Data Bank, Ministry of Commerce, Government of India.
    • 3. BP Statistical Review of World Energy, June 2015.
    • 4. Annual Report 2014-2015, Ministry of Shipping, Government of India.