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Published on: Aug. 11, 2023, 2:04 p.m.
Modi’s UAE card
  • Modi with Al Nahyan: wooing the UAE

By Rakesh Joshi. Executive Editor, Business India

Narendra Modi’s recent visit to Abu Dhabi was his fifth official visit to the UAE since he became PM in 2014. While this by itself is a remarkable milestone in foreign relations, it also marks one of the most transformational changes in India’s engagement with any country in recent times. Vinay Kwatra, India’s foreign secretary, recently highlighted this fact at a media briefing, when he mentioned that a significant transformation has taken place in India-UAE relations.

Clearly, a central driver of this has been the personal chemistry between Modi and Sheikh Mohamed bin Zayed Al Nahyan, the UAE President. Political analysts have wondered if Modi’s successful wooing of the UAE, given that it is home to a large Indian diaspora is aimed at helping his party, the BJP, politically in the coming Lok Sabha election.

The UAE was also the first country in the region with which India decided to elevate the ties to a comprehensive strategic partnership during Modi’s visit in August 2015. This has been later followed by similar partnership agreements with Saudi Arabia and, most recently, with Egypt.

‘Home away from home’ is how Modi described the UAE, while addressing the Indian diaspora at Dubai during his visit to UAE in February 2018. Since his first visit, the growing relationship is particularly reflected in the strong economic exchanges, both on trade as well as investments, people-to-people ties and also convergence on a range of regional and international issues. Bilateral trade has grown to $85 billion in 2022-23, making the UAE India’s third-largest trading partner.

The UAE is also India’s second-largest export destination. Also, with large sums of FDI flows, it is the fourth-largest overall investor in India. The landmark agreement CEPA (Comprehensive Economic Partnership Agreement) signed on 18 February 2022, in a record time of 88 days has laid the foundation for the exponential increase in trade and economic partnership; and it is yet another example of mutual trust and the special bilateral relationship. CEPA aims to increase employment opportunities and bilateral trade in goods to $100 billion in five years and trade in services up to $15 billion.

Boosting local currencies

The RuPay card, a key initiative by India in digital payment system, was launched in Abu Dhabi on 24 August 2019, making the UAE one of the few countries to have such a tie-up with India. The recent agreements signed with the UAE to establish a framework for settlement of cross-border transactions in local currencies and to inter-link the payment and messaging systems of the two countries, are especially significant given the prominence of UAE in India’s trade and capital flows. 

Looking ahead, energy supplies will remain a key element of co-operation. In this, Indian Oil Corporation and GAIL have been in talks with the UAE’s Abu Dhabi National Oil Co for a long-term liquefied natural gas (LNG) supply contract. If an agreement comes through, it will help India diversify LNG imports, which are at present built primarily on a long-term import contract with Qatar.

  • Political analysts have wondered if Modi’s successful wooing of the UAE, given that it is home to a large Indian diaspora is aimed at helping his party, the BJP, politically in the coming Lok Sabha election

Diplomatically, the UAE’s role and importance in the West Asian region makes it a key pillar of India’s West Asia strategy. The UAE is a part of ‘I2U2’ grouping or the ‘West Asian Quad’ comprising India, UAE, Israel and the US, which held its first summit-level meeting on 14 July 2022, a clear recognition of the importance of the UAE in the region. The Abraham Accords of 2020, which resulted in the UAE joining Israel in a formal diplomatic alliance, is a clear indication that the emirate wants to take the lead and set the agenda for the region in the future.

Modi was invited as the keynote speaker at the World Government Summit in February 2018 in the UAE and in March 2018; also, India was the ‘Guest of Honour’ country at the Abu Dhabi Festival (ADF), which is the UAE’s annual cultural festival. During his visit to the UAE in August 2019, Modi was awarded the prestigious ‘Zayed Medal’ for playing a ‘pivotal role’ in giving a ‘big boost’ to the bilateral strategic ties. India, too, on its part, recognises the UAE as a special partner.

Crown Prince Sheikh Mohamed bin Zayed Al Nahyan was the chief guest at the Republic Day in Delhi in 2017. The UAE is one of few select countries that have been accorded a ‘Special Invite’ in India’s G20 presidency this year. India is also collaborating closely with the UAE in the COP28 Summit on climate change being hosted by UAE in 2023.

Both countries have often gone beyond the normal to make this partnership special as well as strategic. The UAE is the only nation from the region, which has offered to store strategic oil reserves in India. When UAE hosted the OIC Summit in 2019, it invited external affairs minister late Sushma Swaraj despite protests from some nations, including Pakistan. The inauguration of the first Hindu temple in Dubai on 5 October 2022 is indeed a special gift to the Indian community by the UAE – and recognition of their role in building that nation.

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