• UGI USER
  • Feb 14, 2024
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OLD-FASHIONED TRUST AND CREDIBILITY BIND INDIA-UAE TIES

Relevance:  GS 2- Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

Why in the News?

  • Prime Minister Modi received a ceremonial welcome at Abu Dhabi airport. UAE President Sheikh Mohamed bin Zayed al Nahyan personally greeted PM Modi.
  • The event, named ‘Ahlan Modi’ (Hello Modi in Arabic), was addressed by Modi at Zayed Sports City Stadium generating excitement among the 5 million Indian community in the UAE.
  • Unique Diplomatic Relationship
    • Amid a backdrop of transactional diplomacy, the personal bond between the PM and UAE President stands out. It is characterised by trust and credibility, surpassing conventional diplomatic norms.

About the Visit

  • PM Modi’s current visit to the UAE marks his third within eight months.
    • Previous visits include bilateral discussions in July 2023 and attendance at COP28 in November.
  • The visit coincides with the religious calendar for the inauguration on February 14 of the first Hindu stone temple in Abu Dhabi, the Bochasanwasi Shri Akshar Purushottam Swaminarayan Sanstha (BAPS) Mandir.
    • It highlights PM Modi’s previous request, made in August 2015, for land to build a temple catering to the UAE’s Hindu community.
  • The leaders held a bilateral meeting and signed eight agreements.
    • A bilateral investment treaty was signed between the two sides.
  • An agreement was reached on inter-linking domestic credit/debit cards, specifically RuPay India with JAYWAN (UAE).
  • The leaders reviewed various aspects of the India-UAE Comprehensive Strategic Partnership.
    • Discussions were held on strategies to enhance and strengthen this partnership.

Focus on Substantive Aspects

  • Emphasis is placed on not allowing the temple inauguration to overshadow other significant aspects of the visit.
    • Notable among these is PM Modi’s role as a guest of honor at the 11th World Government Summit in Dubai.
  • The summit, often likened to Dubai’s version of Davos, attracts global government leaders, industry captains, and thought leaders.

World Government Summit

  • The summit’s theme, “Shaping Future Governments,” aligns with India’s agenda to present its perspectives to an influential global audience.
  • It offers India a platform to articulate its views on shaping future governance before an esteemed international audience.

Launch of Bharat Mart

  • PM Modi is expected to inaugurate Bharat Mart, a significant initiative by Dubai-based DP World and India’s Ministry of Commerce and Industry.
  • The project aims to enhance exports of Indian Micro, Small and Medium Enterprises (MSMEs) by offering retail, warehousing, and logistics facilities in Dubai’s Jebel Ali Free Zone Area.

  • DP World plans to construct 800 showrooms and 18 warehouses over the next 24 months on a 1.3 million square feet plot.
  • This will enable Indian manufacturers across various sectors to showcase their products and access markets in Iran, Central Asia, Africa, and the Middle East.

Impact of Bharat Mart and CEPA

  • Bharat Mart complements the India-UAE Comprehensive Economic Partnership Agreement (CEPA), which completed its first year in 2023.
  • India’s trade with the UAE has surged by 16% to $85 billion under CEPA, reinforcing the UAE’s status as India’s third largest trading partner and second largest export destination.

  • The combined effect of CEPA and Bharat Mart has the potential to significantly boost India’s export of manufactured goods, aided by trading in national currencies to reduce transaction costs.

Strengthening Economic Relationship

  • Memoranda of understanding signed during the bilateral engagement further fortify the economic ties between India and the UAE.
    • Additional achievements include the initiation of a master’s programme in energy transition and sustainability by the Indian Institute of Technology Delhi in Abu Dhabi.
  • The UAE has emerged as the fourth highest source of foreign direct investment into India in 2022-23.
  • The Abu Dhabi Investment Authority (ADIA) is set to open an office in GIFT City, Gujarat.
  • Indian Oil Corporation Limited signed a 14-year deal during 2026-39 to purchase 1.2 million metric tonnes per annum of liquefied natural gas from the Abu Dhabi National Oil Company, enhancing India’s energy security.
  • Progress is noted in discussions on various sensitive areas of defense cooperation between the two nations.

Reviewing Regional Situation:

  • Talks between PM Modi and Sheikh Mohamed bin Zayed encompassed an assessment of the escalating situation in the region.
    • Key issues discussed include the ongoing war in Gaza and the attacks by Houthis on shipping in the Red Sea.
  • The discussions also highlighted the imminent threat of further escalation in the region’s tensions.
  • Economic Implications
    • Longer shipping times, heightened freight costs, and potential oil price hikes pose significant risks to India’s economic growth.
    • Close coordination with regional players like the UAE, along with nations such as Saudi Arabia and Egypt, is crucial to safeguarding India’s interests.

Need for Strategic Coordination

  • Given the potential risks to economic stability, it’s imperative for the Indian government to closely coordinate with key regional stakeholders.
  • Collaborative efforts with the UAE, Saudi Arabia, Egypt, and other relevant nations are essential to ensure the protection of India’s economic interests amidst regional uncertainties.

Source:

Mains question

Discuss the significance of the India-UAE Comprehensive Economic Partnership Agreement (CEPA) in enhancing bilateral trade relations and its impact on India’s economic diplomacy strategy. (250 words)