VISIT OF UAE PRINCE TO INDIA

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Context:

The Crown Prince of Abu Dhabi visited India to discuss bilateral cooperation and address regional issues.

Details

• The Prime Minister of India and the Crown Prince discussed the working of the Comprehensive Economic Partnership Agreement (CEPA) and the recently adopted Bilateral Investment Treaty (BIT).
  • These agreements are critical in strengthening the economic and commercial relationship between the two countries.
• They also discussed potential future collaborations in nuclear energy, critical minerals, green hydrogen, and advanced technologies like artificial intelligence, highlighting potential for mutual growth and innovation.

Outcome of the Visit

• A Memorandum of Understanding (MoU) was signed by India's Nuclear Power Corporation (NNPCIL) and the UAE's Emirates Nuclear Energy Corporation (ENEC).
  • • This agreement aims to increase collaboration in nuclear power, including facility operation, maintenance, and shared investment potential.
• A significant deal was reached for the supply of 1 million metric tonnes per annum (MMTPA) of liquefied natural gas (LNG) by Abu Dhabi National Oil Company (ADNOC) to Indian Oil Corporation.
• ADNOC and India Strategic Petroleum Reserve Limited (ISPRL) have signed a memorandum of understanding (MOU) for exploring crude storage potential in India,
• The Production Concession Agreement between Urja Bharat and ADNOC enables Urja Bharat to bring crude oil to India.
• An agreement between the Government of Gujarat and Abu Dhabi Developmental Holding Company PJSC (ADQ) describes plans to establish food parks in Gujarat

About India-UAE Relations

• India-United Arab Emirates (UAE) relations date back to historical trading routes.
  • • India and the UAE have had close ties to historic trade networks, with marine routes allowing Arab trade in silk, spices, gold, and porcelain.
• Modern-day diplomatic connections started in the early 1970s, and with the time strengthened politically, economically, and culturally.

Political Relations

• India and the United Arab Emirates (UAE) have maintained diplomatic ties since 1972, with the UAE opening an embassy in India in 1973.
• The relationship gained momentum during the Indian Prime Minister visit to UAE in 2015, which marked the start of a new Comprehensive and Strategic cooperation.
• Both countries participate in several multilateral platforms, including, United Nations, I2U2 (India-Israel-UAE-USA), and UFI (UAE-France-India).
• The UAE was invited as a Guest Country to the G20 Summit under India's presidency.

Economic Relations

• India and the UAE have a long history of trading, with the UAE exporting traditional commodities such as dates, and pearls to India.
• The discovery of oil in the UAE in 1971 prompted a slow increase in Indian exports, which began to rise after Dubai became a regional trading hub in the early 1990s.
  • • The expansion helps to maintain the stability and strength of the two countries' rapidly expanding and deepening strategic cooperation.
• India-UAE trade amounted to $85 billion in 2022-23.
  • • UAE is India's third-largest trading partner after China and the United States.
    • UAE is India's second-largest export destination.
• Between April 2000 and March 2023, the UAE invested around $20-21 billion in India.
  • • In 2022-2023, the UAE was India's fourth-largest foreign direct investor.
• India’s major export items to the UAE are: Petroleum Products, Precious Metals, Stones, Gems & Jewellery, Minerals, Food Items (Cereals, Sugar, Fruits & Vegetables, Tea, Meat, and Seafood), Textiles (Garments, Apparel, Synthetic fibre, Cotton, Yarn) and Engineering & Machinery Products and Chemicals.
• India’s major import items from the UAE are: Petroleum and Petroleum Products, Precious Metals, Stones, Gems & Jewellery, Minerals, Chemicals, Wood & Wood Products.
• NRI remittances from UAE accounting for 18% of total remittances to India in 2020-21.
• India and the UAE have signed a MoU to establish a Local Currency Settlement (LCS) System to facilitate cross-border transactions using Indian Rupee and AED (Arab Emirates Dirham).
• India and UAE have signed agreements to interlink digital payment platforms, UPI and AANI, facilitating seamless cross-border transactions and enhancing financial connectivity.
  • • They have partnered on interlinking domestic debit/credit cards, RuPay and JAYWAN, enhancing universal acceptance of RuPay across the UAE.

Cultural and People-to-People Relations

• More than 3.5 million Indians live in the UAE.
• Indians are the largest ethnic community in the UAE, more than 30% of the country’s population.
• A Joint Commemorative Stamp was launched in February 2022 to mark 75 years of India's Independence, and 50 years of the India-UAE diplomatic relations.
• There are more than 100 International Indian schools in the UAE following the CBSE and Kerala Board curricula, with most children of Indian origin settled in the UAE.
• India and UAE have signed a cooperation protocol to restore and preserve archival material, with both countries aiming to support the Maritime Heritage Complex in Gujarat.
• India expressed gratitude for UAE's support in construction of the BAPS Temple in Abu Dhabi
  • • It is the first traditional Hindu stone temple in the Middle East.

Challenges for India-UAE Relations

• The Middle East's geopolitical tensions can indirectly affect India-UAE relations by affecting regional stability and energy security, leading to uncertainties in trade and investment.
• Non-tariff barriers (NTBs) such as mandated Halal certification, have had a substantial influence on Indian exports, particularly in the poultry, meat, and processed food industries.
• The UAE is diversifying its economy from oil dependency, while India is expanding its presence in technology and renewable energy sectors.
  • • Both countries must carefully manage their diversification efforts to avoid competition and ensure mutual benefits.
• Regulatory and bureaucratic barriers, such as ease of doing business, compliance, and market access, may hinder trade and investment, delaying agreement implementation and lowering the efficiency of bilateral economic activity.
• Security concerns, especially terrorism and regional difficulties, provide challenges for both countries, requiring collaboration in counterterrorism and security matters.
• Cultural and social integration in the UAE can be challenging due to the strong cultural ties between the two nations, as these issues can influence public opinion and the overall relationship between the two nations.

Way Forward for India-UAE Relations

• Enhance diplomatic engagement through high-level visits, bilateral dialogues, strategic partnerships, and joint task forces to address regional and global challenges.
• Promoting economic collaboration in emerging sectors like renewable energy, technology, and infrastructure through joint ventures and investment partnerships.
• Simplifying regulations and promoting mutual recognition of standards can facilitate smoother trade flows and enhance market access for Indian products.
• China's growing economic presence in the Middle East presents challenges, but promoting transparency, sustainability, and fair business practices can create joint investment platforms.
• Strengthening security cooperation by implementing joint counter-terrorism initiatives, sharing intelligence, and collaborating to tackle regional security challenges.

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PRACTICE QUESTION Q. Critically analyze the impact of the India-UAE Comprehensive Economic Partnership Agreement (CEPA) on bilateral trade and economic cooperation. What are the key benefits and challenges associated with this agreement for both countries? (250 Words)