Old friends, new ideas

India and the UAE are set to embark on a new relationship marked by collaboration in renewable energy and shared security interests.

“India’s relations with the UAE continue to be warm, cordial and diversified based on continuity, mutual trust and confidence, devoid of any contentious issue,” says M.K. Lokesh, Ambassador of India to the UAE. “There is an emergence of new commonalities of approach and outlook on various international issues between both nations over a period of time. India recognises the UAE as a strategic partner and is aware of the potential of the growing clout of the UAE economically and politically, and thus, wants to diversify relations and be fruitfully associated with it.”

At present, the Indian Embassy confirms that more than 1.71 million Indians reside in the UAE and account for a staggering 42.5 per cent of the total workforce.

Growth in trade

Trade between the two nations goes back millennia. Last November, at a seminar on Indo-Arab relations at the embassy, leading curators and archaeologists presented evidence — potsherds, copper and sundry goods — tracing the relationship to the Bronze Age. This evidence shows that both nations nurtured ties that stemmed from trade and blossomed into a mutual respect strong enough to see the UAE adopt the Indian rupee as its currency until 1966.

Fast forward to the present and bilateral economic relations have never been better. Last year, two-way trade including oil trumped predictions to reach $67 billion (about Dh246 billion) with non-oil trade at about $47 billion; where the bulk of the non-oil trade between both countries involves Dubai. Trade between the two nations rose 140 per cent in 2010-2011 and is expected to reach $103.6 billion by 2025, according to a report released by HSBC bank. This will make India the UAE’s largest trading partner — above China, the UAE’s largest trading partner in 2010. Indian exports to the UAE have grown 43 per cent and imports from the UAE to India have grown 68 per cent in 2009-2010.

Foreign direct investment (FDI) remains a top priority for both nations. Indian expatriates are estimated to own nearly half of the currently active registered companies in the UAE, and India is the third-largest investor in the country. Top companies, such as Dodsal, Reliance Industries, Infosys and Bharat Heavy Electricals Limited have operations in the UAE.

Between 2005 and 2009, Indian companies invested $8.6 billion in the UAE, while the UAE’s investment in India touched $17.2 billion. Currently, UAE investment in India is concentrated in five sectors: energy (19.1 per cent); services (9.3 per cent); programming (7.8 per cent); construction (6.8 per cent); and tourism and hotels (5.6 per cent), according to figures released by Consulate General of India, Dubai.

Undoubtedly, there’s room for further growth and diversification. “We can, of course, have more investment coming into India from the UAE, especially in the development of infrastructure facilities. Similarly, Indian companies are looking for opportunities in the new free zones being developed in the UAE,” says Lokesh. “Both countries can strive towards a more strategic relationship for the future, based on cooperation in science and technology, the knowledge industry, tourism, defence and security; as well as partnering in the global fight against terrorism and extremism.”

Green cooperation

As the Emirates takes the lead in developing and applying clean technology and renewable energy, India is beginning to expand its own renewable energy ambitions by leveraging the UAE’s knowledge. While India was the first nation to establish a dedicated ministry for renewable energy, as far back as the 1980s, Lokesh says the existing industry requires investment in this area to develop it further.

Shaikh Abdullah Bin Zayed Al Nahyan, the UAE Foreign Minister, paid his first visit to India in 2009, calling for scaled up economic and energy ties and sought New Delhi’s help to develop renewable energy as well as its support for locating the headquarters of The International Renewable Energy Agency in Abu Dhabi, where it has since been instituted. Significant investment in India’s renewable energy sector came about in 2008, when Dubai Investment Group acquired a 40 per cent stake in India’s Chiranjjeevi Wind Energy, a wind turbine manufacturer in India. More recently, reports have confirmed Abu Dhabi Investment Company setting aside $1 billion for India, which will primarily target power and renewable energy.

India’s attendance at the recent 2012 World Energy Summit in Abu Dhabi helped highlight its current energy initiatives, including the Jawaharlal Nehru National Solar Mission, which will adopt a three-phase approach with the objective to establish India as a global leader in solar energy. While India’s installed capacity of renewable energy is estimated at 16,000MW, about 6,000MW was added in the last three years, reflecting the rapid pace of growth. The first phase of the mission aims to commission 1,000MW of grid-connected solar power projects by 2013.

Peace and security

The UAE and India have exchanged several high-profile visits in the last three years, resulting in strategic bilateral agreements and MoUs. In November, Lt Gen Shaikh Saif Bin Zayed Al Nahyan, Deputy Prime Minister and UAE Minister of Interior, visited India to sign two important pacts, namely the Agreement on Transfer of Sentenced Persons and the Agreement on Security Cooperation. The pacts will enhance cooperation between intelligence and law-enforcement officials in both countries, explains Lokesh. They will also combat international terrorism and crime, safeguard law and public order, and help prevent both money laundering and easy access for terrorist organisations operating from either nation.

Last year was significant for India in terms of exacting change in security policies and initiatives, which included its assuming the chair of the Indian Ocean Rim — Association for Regional Cooperation this year. A subsequent agreement between member countries to fight maritime piracy has seen both countries take initiatives to discuss and combat the issue.

Looking forward, the Embassy expects labour issues to stay in focus. These include contract substitution, the withholding of employee passports, the non-payment of salaries or dues by companies and the illegal employment of Indians brought in on visit visas — although Lokesh says the two countries are working together to address these issues.

Culturally, the embassy has partnered with the Indian Council for Cultural Relations, the UAE’s Ministry of Culture and the Abu Dhabi Authority for Culture and Heritage (ADACH) to effect the translation of Indian books into Arabic and organise seminars on Indo-Arab cultural relations. Future  initiatives will see the exchange of scholars and artists, and the organising of a regional Bharatiya Diwas (India Day) diaspora meet in Dubai this year.

Ambassador Lokesh closes on a poignant note, reflecting on the current economic climate that has seen India’s exceptional growth rate take a slight dive, but admits that it is a good opportunity for Indian expatriates to invest in their home country. “While the economic downturn may have impacted the Indian economy, India still shows a growth rate of over 6 per cent. The UAE and India are unlikely to be significantly affected by the downturn, as both countries have strong economic fundamentals, as evidenced by the robust trade figures this year.

“As for India, on the basis of domestic demand — consumption and investment — we should be able to cope with the crisis. Our banking system is better regulated and the domestic savings rate is as high as 35 per cent of our GDP. This should help us pull through the crisis.”