India - UAE Relations [UPSC Notes]

India and the United Arab Emirates (UAE) share good bilateral relations and India’s recent proactive diplomacy in West Asia has seen the emergence of the UAE as a significant partner. A senior official of the UAE also commented that the basis of the India-UAE partnership is a “reservoir of trust”. In this context, it is important to understand the full dynamics of the India – UAE partnership and the way forward. This topic is relevant for the IAS exam international relations segment of GS paper II.

India – UAE Bilateral Relations

When Prime Minister Narendra Modi visited the UAE in 2015, the relationship between the two countries received a big push after a lull of 34 years. After that, there were multiple prime ministerial visits to the UAE. In 2017, UAE President Sheikh Mohammed bin Zayed Al Nahyan was the chief guest of the Republic Day parade in New Delhi. In 2019, PM Modi was awarded the Order of Zayed, the UAE’s highest civilian award. All this took the relationship to new heights and showered a new vigour into the bilateral ties between India and the UAE.

• The two nations have enjoyed cultural, religious and economic ties for a long time. However, official diplomatic relations were established in 1972. 
• The UAE established its embassy in New Delhi in 1972 and India set up its embassy in Abu Dhabi (the capital of UAE) in 1973.
• Since then, both nations have tried to extend their relationship deeper.

India – UAE Relations Latest Developments

On 14th Feb 2024, in a significant milestone for India’s international relations, PM Modi inaugurated the historic BAPS Swaminarayan Mandir in Abu Dhabi. This is the first Hindu stone temple in the Middle East region. Adorned with seven spires, the Mandir symbolizes gratitude towards the unity of the seven emirates, reflecting the harmonious relationship between India and the UAE. The land was this temple’s construction was given by the Emirati government during Mr Modi’s 2015 visit to the UAE.

Aspects of India – UAE Relations

The different aspects or pillars of the bilateral relationship between India and the UAE are discussed in this section.

Strategic/Political/Security Relations

• Iran’s threats to close the Strait of Hormuz due to its conflict with Saudi Arabia are worrying for the UAE also.
• Earlier, Pakistan was a partner of the UAE and had deep security cooperation with it. However, of late, Pakistan does not seem to be of much help to the UAE; it could not come to the aid of Saudi Arabia in its fight against the Iran-backed Houthi rebels in Yemen. Pakistan has also been unable to control the separatists operating from its soil across West Asia.
• There has been rising congruence between India and the UAE on terror-related issues.
• In 2003, an MoU was signed between India and the UAE on Defence Cooperation. A Joint Defence Cooperation Committee (JDCC) was also set up.
• The UAE and Israel have agreed to normalise their relations. This opens up the possibility of India, Israel and the UAE working together to counter terrorism and security-related concerns.

Economic Relations

• Trade can be called the backbone of the bilateral relations between both countries.
• Until the discovery of oil in that region, trade was dominated by traditional items such as pearls, fish, dates, etc.
• Export from India also increased gradually since the UAE was unified as one entity in 1971.
• Currently, the UAE is India’s third-largest trading partner. It is also the second largest export destination for India, second only to the United States.
• India is the Emirates’ second-largest trading partner.
• The UAE’s foreign direct investment (FDI) in India has increased over the past few years and has surpassed $12 billion. 
• Abu Dhabi has invested over $6 billion in big-ticket investments in the Jio platform, Adani, Tata Motors and Tata Power.
• A comprehensive free trade agreement has been in effect between India and the UAE since 2022. A variety of items from both nations are granted duty-free access to the markets of the other under the agreement, in addition to loosened regulations to encourage investment. 
• The Comprehensive Economic Partnership Agreement (CEPA) signed in 2022 between India and the UAE is one of the key drivers of the rise in FDI from the UAE.
• Energy cooperation is one of the biggest areas of cooperation between both countries. It is one of the top five largest suppliers of crude oil to India.
• Additionally, the UAE has promised to collaborate with India on renewable energy projects.
• The UAE has also entered into an agreement with Karnataka for the strategic storage of crude oil in Padur and Mangalore.

Also read: UAE Emerges as Fourth Largest Investor in India in FY23

Diaspora 

• There is a huge Indian diaspora in the UAE engaged in various activities.
• The number of Indian nationals in the country is estimated to be 3.5 million as of 2021.
  • This constitutes roughly 30% of the UAE’s total population.
• The UAE is an important destination for job seekers (both blue and white-collar workers) from India.

Challenges and Way Forward

Some of the issues in the relationship between both countries are:

• There are some commercial challenges that Indian companies face in the Emirates concerning unclear regulations, labour laws and transparency issues by Emirati businesses.
• The UAE and Iran have territorial disputes between them. Any flare-up in this will affect India’s trade, the Indian community and energy security.
• The UAE is home to a large number of Indians, among them blue-collared workers and manual labourers as well. They face many issues such as terrible working and living conditions, and discrimination in treatment vis-a-vis other workers.

Even though the relations between India and the UAE are acquiring new heights, there are a few challenges and bottlenecks that need to be addressed if the true potential of the bilateral relationship is to be achieved. 

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