Image Credit: Dwynn Ronald V. Trazo/©Gulf News

The bonhomie between His Highness Shaikh Mohammad Bin Zayed Al Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces, and Narendra Modi, Prime Minister of India, was palpable in recent days as the two leaders met in New Delhi. With a slew of agreements sealed between the two nations, trade and commerce topped the high-powered discussions. Business remains the centrepiece of relationship between the UAE and India. With trade figures standing at $50 billion (Dh183.9 billion) in 2016, the UAE is being billed as the gateway for India’s exports to Africa and Central Asia.

Shaikh Mohammad Bin Zayed’s visit on the eve of India’s Republic Day is expected to give a new fillip to the growing relationship between the two strategic partners. With as many as 14 agreements signed during the visit, the memorandum of understanding (MoU) on the proposed $75 billion UAE investment in Indian infrastructure, formed the nucleus of official deliberations.

Previously some investors who forayed into India have complained of bottlenecks and lack of transparency, but the country’s investment scene is getting better. Ever since he assumed office, Modi has spent much political capital in introducing key changes in India’s investment climate, to make it more investor-friendly. As more adjustments are made to lessen the contractual risks of investors, UAE will be further encouraged to invest in India’s infrastructure projects.

Shaikh Mohammad Bin Zayed’s India visit marked the signing of MoUs between the two countries in the fields of defence, maritime cooperation, shipping, cyberspace and commerce among other areas. This is a key development and reflects the investment of personal time and energy from both sides.

Strategic partners in energy

One of the highlights of the state visit was the signing of the strategic oil deal, which is seen as a sign of deepening bond between the UAE and India. The deal will allow state-owned Abu Dhabi National Oil Company (Adnoc) access to India’s new strategic oil reserves storage facility to store 6 million barrels of crude. Analysts note that the deal is the beginning of a flurry of investments, which are expected to take place in the energy sector. While the deal will allow Adnoc to increase its market share in delivering high-quality crude to India’s expanding refining industry, it affords a cushion to India to meet its growing energy demand and safeguard its security.

As one of the world’s fastest-growing oil consumers, India’s oil consumption is the third-largest in the world, behind the US and China. Estimated to have grown by 11 per cent, to nearly 200 million tonnes in 2016, the country was eager to firm up an oil storage agreement with the UAE. In works for nearly a year, the storage deal inked between Indian Strategic Petroleum Reserves and Adnoc will allow the UAE firm to store its crude at the new Karnataka underground facilities in the southern Indian city of Mangalore. Apart from building upon its existing business plans, the pact paves way for new downstream opportunities for Adnoc’s expanding range of refined and petrochemical products. With the UAE supplying about 8 per cent of India’s oil, both sides see tremendous potential in joint investments in refinery, petrochemical, pipeline and liquefied natural gas terminals.

While energy remains a critical area, India and the UAE also agreed to sustain the momentum of their relations in other key areas. The two sides signed a Comprehensive Strategic Partnership, thereby elevating the relationship between the two countries from bilateral to strategic. The new framework is expected to substantially change the nature of the India-UAE relationship. Besides giving Indian and UAE officials access to the highest levels of government on both ends, the partnership will allow for congruence on issues of mutual interest.

Mechanism for investment

By inviting Shaikh Mohammad as the chief guest for the Republic Day celebrations, India made a rare exception: This is the first time in more than 50 years that India has hosted a non-head of state to be its chief guest. Beyond the personal rapport that the leaders of the two nations share, there is a growing sense that India and the UAE have a lot to benefit from the special bond.

During Modi’s visit to the UAE in August 2015, the two sides had announced a plan to create a mechanism to facilitate UAE’s investment in India over a period of 10 years. Prior to the announcement, India had set up a National Investment and Infrastructure Fund (NIIF). While the project was faced with some delay as the terms and rules were being worked out, NIIF subsequently got a CEO. Fast forward to January 2017, most technicalities towards the creation of the fund have been formalised.

The Gulf Cooperation Council (GCC) is India’s second-largest trading partner, the largest single origin of imports into the country, and the second largest destination for exports from India. More than 45 per cent of India’s petroleum is imported from the GCC. The UAE is the sixth largest source of imports of crude oil. A few other regions are so critical for India’s security and prosperity than the Middle East. As an important member of the GCC, the UAE aims to solidify relations with India in areas like security, counterterrorism, space exploration, renewable energy, infrastructure and cultural cooperation. It has laid out a bold agenda for bilateral cooperation and India has aptly reciprocated.

Beyond the strategic and diplomatic courtesies, there are deeper ties that bind the two peoples. Indian expats comprise around 30 per cent of the total population of the UAE, with Indians having a significant presence in Saudi Arabia, Bahrain, Oman and Qatar. More than 50 per cent of remittances to India comes from the Arabian Gulf. Over the years, these funds have hugely aided in India’s economic resurgence. Be that as it may, the UAE will continue to look at India for its human talent and skill-set to develop sectors like information technology, construction, transportation and services. From its energy needs to the shared history of trade between South Asia and Middle East, both India and the UAE stand upon an excellent foundation from which to make this alliance durable, effective and long-lasting.

Agreements at a glance

  1. Comprehensive strategic partnership between the UAE and India.
  2. Technology development and cooperation in cyberspace.
  3. Cooperation in defence industry.
  4. Agreement on strategic oil storage and management.
  5. Institutional cooperation on maritime transport.
  6. Mutual recognition of certificates of competency as per Standards of Training, Certification and Watchkeeping for Seafarers (STCW) provisions.
  7. Bilateral cooperation in road transport and highways.
  8. MoU on prevention and combating of human trafficking.
  9. MoU on cooperation in small and medium industries and innovation.
  10. Partnership in agriculture and allied sectors.
  11. Mutual exemption of visa for diplomatic, special and official passport holders.
  12. Agreement on trade remedial measures.
  13. Cooperation on energy efficiency services.
  14. MoU on cooperation in programme exchange.