International Relations

India-UAE Relations

  • PM Modi recently emphasised the significance of India-UAE relations during the Vibrant Gujarat Summit 2024.
  • The Chief Guest, UAE President Sheikh Mohammed bin Zayed, engaged in bilateral negotiations.

India-UAE Relations: Historical Context

  • India-UAE ties have reached key milestones:
  • India-UAE CEPA: This deal, which went into effect on May 1, 2022, reduced tariffs on more than 80% of items, allowing 90% of Indian exports to the UAE to be duty-free. Non-oil commerce increased to $50 billion between May 2022 and April 2023, with a $100 billion objective by 2030.
  • IMEC: The UAE is critical to the India-Middle East-Europe Economic Corridor (IMEC), which provides an alternative to China’s Belt and Road initiative.
  • The I2U2 Group, which includes India, the UAE, Israel, and the United States, fosters technology and private-sector collaboration in water, energy, and transportation.
  • Rupee-Dirham Agreement: The Reserve Bank of India and the Central Bank of the UAE have developed a framework for utilising local currencies in cross-border transactions, therefore lowering reliance on the US dollar.
  • Cultural Exchange: The UAE’s tolerance is demonstrated by the construction of the BAPS Hindu Mandir in Abu Dhabi, the first temple of its sort.

The significance of India-UAE relations

These linkages have enormous strategic, political, economic, and cultural significance:

[A] Strategic Significance:

  • Security Concerns: As tensions in the Middle East rage, the India-UAE cooperation strengthens both countries’ security, particularly combating piracy and terrorism.
  • Energy Security: The UAE is India’s sixth-largest crude oil supplier, with a significant part in the country’s Strategic Petroleum Reserves Programme.

[B] Political Significance:

  • Multilateral Reforms: The UAE assists India on a variety of international venues.
  • Counterbalancing China’s Regional Dominance: India’s improved relations with the UAE serve to mitigate China’s expanding dominance in the region.
  • Engagement with Regional Alliances: Improved India-UAE relations may pave the way for India’s membership in organisations such as the OIC and a free trade deal with the GCC.

[C] Economic Significance:

  • Remittances: The UAE is a key source of remittance inflows into India.
  • Trade and Investment: The UAE is India’s third-largest trading partner, with significant investments in a variety of areas.
  • Access to the African Market: India’s relationship with the UAE facilitates its admission into the African market.

[D] Cultural Significance:

  • Safeguarding Indian Diaspora Interests: A strong connection safeguards the interests of the huge Indian expatriate population.
  • Positive relations boost India’s soft influence in the Middle East.

India-UAE Relations Challenges: 

  • Trade Restrictions: The UAE’s Non-Tariff Barriers (NTBs), such as SPS controls and TBT, have impacted Indian exports, especially in poultry and processed goods.
  • Chinese Economic Influence: China’s “Cheque Book Diplomacy” has overshadowed Indian businesses in the UAE.
  • Kafala Labour System: Immigrant labourers face harsh working conditions, passport seizure, and delayed wages.
  • Financial Aid to Pakistan: There are concerns over the UAE’s large financial aid to Pakistan.
  • Iran-Arab Dispute: Balancing relations between the UAE and Iran throughout their conflict is a diplomatic issue.
And get notified everytime we publish a new blog post.