UAE’s Crown Prince Visit to India

General Studies Paper -2

Context: UAE’s Crown Prince is on an official visit to India.

Major Highlights

• Defence Cooperation: Strengthened defence collaboration and increased manufacturing partnership.
• Focus on scaling up defence cooperation to match trade and business progress.
• Training exchanges identified as a key area to enhance bilateral defence ties.
• Formalising Coast Guard-to-Coast Guard cooperation through an MoU.
• Educational Initiatives: Agreement to set up IIM Ahmedabad’s first overseas campus in Dubai (MBA program starting in 2025).
• Launch of Indian Institute of Foreign Trade (IIFT) campus at Expo City Dubai.
• Infrastructure and Economic Projects: Bharat Mart construction to begin and a 3-D rendering of the complex launched.
• Allocation of land for UAE-India Friendship Hospital in Dubai.
• Development of ship-repair clusters at Kochi and Vadinar.
• Establishment of an India Office for the Dubai Chamber of Commerce.

Brief overview of the UAE and India Relations:

• Political: India and the United Arab Emirates (UAE) established diplomatic relations in 1972.
• Multilateral Cooperation: India and the UAE are currently part of several plurilateral platforms such as I2U2 (India-Israel-UAE-USA) and UFI (UAE-France-India) Trilateral, etc. UAE was also invited as a Guest Country to the G-20 Summit
• Economic & Commercial: CEPA was signed in 2022, since the agreement, bilateral merchandise trade has nearly doubled from USD 43.3 billion in FY 2020-21 to USD 83.7 billion in FY 2023-24.
• UAE is the second largest export destination of India (after the US) with an amount of nearly US$ 31.61 billion for the year 2022-23.
• Bilateral trade is expected to surpass $97 billion, with targets to hit $100 billion in non-oil trade.
• Defence cooperation: It is steered through a Joint Defence Cooperation Committee (JDCC) at the Ministry level, with the signing of Agreement on Defence Cooperation in 2003, which came into effect in 2004.
• Space Cooperation: Indian Space Research Organisation (ISRO) and the UAE Space Agency signed an MoU regarding cooperation in the exploration and use of outer space for peaceful purposes in 2016.
• Indian Community: Indian expatriate community of approximately 3.5 million is the largest ethnic community in UAE constituting roughly about 35% of the country’s population.

Challenges

• Trade Imbalances: India has a trade deficit with the UAE, primarily due to high oil imports from the UAE, which makes the economic relationship uneven despite growing non-oil trade.
• Geopolitical Tensions in the Region: Political instability in the Middle East and the Gulf region affect bilateral relations, especially with India’s strategic interests in the region.
• Labor and Migration Issues: India is one of the largest sources of migrant labor in the UAE, and issues related to the welfare and rights of Indian workers have been a point of concern.
• Foreign Policy of UAE: India’s relations with countries like Iran and Pakistan sometimes complicate its relations with the UAE, which maintains different strategic priorities in the region.

Way Ahead

• Aggressively pursue the USD 100 billion non-oil trade target: Leverage the Comprehensive Economic Partnership Agreement (CEPA) by actively addressing any implementation challenges.
• Focus on trade diversification: Move beyond traditional sectors like oil and gems & jewelry to boost trade in high-growth areas such as technology, renewable energy.
• Enhance investment flows: Encourage greater UAE investment in India’s infrastructure, manufacturing, and technology sectors, and vice versa.
• Support MSMEs and startups: Actively involve Micro, Small, and Medium Enterprises (MSMEs) and startups in the bilateral trade and investment ecosystem through initiatives like Bharat Mart.
• Strengthening Diaspora: Strengthened ties through the large Indian diaspora in the UAE, facilitating cultural exchange and collaboration in various sectors.