india uae partnership
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India and UAE: A Comprehensive Partnership
in 21st Century
Zakir Hussain
Research Fellow
Indian Council of World AffairsSapru House, Barakhamba Road
New Delhi, India
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India and UAE: A Comprehensive Partnership in 21st
Century
Dr. Zakir Hussain1
If bilateral visits are the barometer of growing intimacy between the two
nations, India and the United Arab Emirates perfectly stand fit to this
parameter. In less than six months, four high level visits have been
exchanged between the two countries. The visit of the UAE’s Foreign
Affairs Minister, Abdullah bin Zayed al Nayahan to India on 15-16 May
carries historical significance in many sense. For the first time, UAE has
openly acknowledged the need for working together with India on some
of the pressing common regional issues such as such as stabilizing
Afghanistan, combating maritime piracy as well as stabilizing Somalia,2
the homeland of piracy in the Gulf of Aden, as well as showed concerns
over the religious and sectarian faultlines emerging in the Gulf. Sheikh Al
Nayahan also expressed his satisfaction over the improving India-
Pakistan relations, and hoped to equiv-balance India and Pakistan.
Otherwise, India has always been termed as “friendly” nation while
Pakistan, “brotherly”.
Furthermore, the visit of Sheikh Abdullah provided the much-need
impetus to the growing economic and strategic engagements between
the two countries as he described India as an “ally and cherished
neighbour”, and said that UAE would like to have a “strong presence” in
the Indian market in future.
1 Dr. Zakir Hussain is Research Fellow at Indian Council of World Affairs, Sapru House, Barakhamba Road, New Delhi. He is an economist, having rich experience on almost all bilateral issues between India and the Gulf and the issues of gulf itself. His area of research is Political Economy of India and the Gulf. He can be accessed at: [email protected]. His mobile no: +91-7838608840.2 UAE Foreign Minister Visits India, http :// defenceforumindia . com / forum / foreign - relations /36494- uae - foreign - minister - visits - india . html
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India and UAE have enjoyed strong bonds of friendship since 3000 BCE.
Culture, religion, polity and economic interactions have played a lead
role in cementing and enhancing their bilateral nexus. However, the
bilateral relations took off particularly after the accession of Sheikh
Zayed bin Sultan al Nahayan as ruler of Abu Dhabi in 1966 and the
formation of UAE Federation subsequently in 1971. Thereafter, the
bilateral engagements between India and the UAE grew at a faster than
with any other country of the region. Both counties signed plethora of
agreements and MoUs, ranging from economy, polity, security, science &
technology, hydrocarbons, agriculture to human resource development,
recreational activities, including culture, sport, to tackling extradition,
crime and preventing inimical uses of the sea and ensuring maritime
security, etc.3
Trade and Commercial Nexus
Trade and commerce has played crucial role in developing the bond of
friendship between the two countries. Since ancient time, UAE has been
India’s trade corridor to the Gulf and beyond. However, major impetus
occurred when Sheikh Zayed bin Sultan al Nahayan assumed the charge
of the UAE and emphasised over outward economic policies. Similarly,
India in the post-1990 period liberalised its economy and trade became
one of the major growth indices. This established a strong synergy
between the two countries. The volume of bilateral trade jumped from
just $170 million annually in 1970s to more than $67 billion in 2010-11,
making UAE India’s largest trading partner, even exceeding China and
the USA. UAE accounts 10 to 14 percent of India’s total trade. Bilateral
trade is expected to surpass $103.6 billion by 2025, according to an
HSBC report.4 The significant of Indo-UAE trade lies in its non-oil
component, enabling India to enjoy favour balance of trade over the last
3 For detailed discussion on Agreements and MoUs signed between India and the UAE see….4 Claire Ferris-Lay, “Banking for Masses”, Arabian Business, 20 October 2011, http :// m . arabianbusiness . com / banking - for - masses -427391. html
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few years. (see Table 1). However, henceforth, when India’s oil import
from UAE grows, India’s trade with UAE will also witness imbalances.5
Table 1
India-UAE Trade, 2002-3/2010-11
(in US$ million)
Year 2002-3
2003-4
2004-5
2005-6
2006-7 2007-8
2008-9 2009-10
2010-11
Export
3327.48
5125.61
7347.88
8591.79
12,021.77
15,636.91
24,477.48
23,970.40
34,349.10
% Growt
h-- 54.04 43.36 16.93 39.92 30.04 56.54 -2.7 43.3
Import
956.99
2059.85
4641.10
4354.08
8655.28
13482.61
23791.25
19499.10
32753.16
% Import
-- 115.24
125.31 -6.18 98.79 55.77 76.46 -18.04 67.97
Total Trade
4,284.47
7,185.46
11,988.98
15,945.87
20,677.05
29,119.52
48,268.72
43,469.50
67,102.26
% Growt
h-- 67.71 66.85 7.98 59.72 40.83 65.76 -9.94 54.37
Trade Balance
2370.49
3065.76
2706.78
4237.71
3366.50
2154.30 686.23
4471.30
1595.94
Source: DGCIS, Kolkata.
Investment Opportunities- Building Long-term Partnership
Investment offers massive scope for establishing stable and strategically
long-term relationships between India and the UAE as trade potentials
between the two has almost reached to its saturation point i.e. $68
billion. Furthermore, on account of certain developments that has taken
place in recent months in New Delhi such as improving economic ties
between India and Pakistan, signing of INSTC (International North South
Transport Corridor) and TAPI (Turkmenistan, Afghanistan, Pakistan and
India) has reduce the chances of growth in trade as these transport
corridors would directly connect these countries to India hitherto doing
business via the UAE. As a result, as these direct transit corridors
5 For instance, bilateral trade with Kuwait amounts to $10 to 12.27 billion, however, India exports only $2.5 billion, rest is imported. Similarly, trade with Saudi Arabia is $25 billion, of which only $5 billion rest India import, i.e. $20 billion. With Qatar, total bilateral trade is around $ 4.6 billion- import $3.7 bn while export is $900 million.
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become operative, UAE significance as a trade corridor linking Gulf, Iran,
Central Asia and part of North Africa will drastically decline.6
Another possible reason of shrinking trade interactions between India
and the UAE is the continued global economic meltdown, which has
drastically affected the US-West economic capability to attract foreign
investments, while on the other hand, the fast emerging economies of the
east, particularly India and China, having strong economic fundamentals,
promises high return to the foreign investments. One more reason of the
UAE investors to focus their investment priorities towards the eastern
economies, particularly India, is “home grown”. The cash-rich Gulf
monarchies are engaged into intense competition amongst themselves,
particularly in select industries such as banking and finance, real estate,
Islamic banking and Islamic finance, stock exchange, etc; consequently,
this leaves little scope to outshine and grow. Already the UAE, which had
relatively suffered more from the economic recession due to greater
exposure to the world economy, is yet to recover fully; its free-port cities
have performed dismally, recoding just only 3.5 percent growth. Hence,
it is not in position to venture into risky business.
The UAE investors, both public and private, have shown keen interest in
India’s sunrise sectors such as real estate, retail sector, downstream,
petrochemicals and fertilizer industry, which promises better and stable
returns. Looking at the investment prospects, UAE’s Foreign Minister
during his media interaction said that “India is not only a very important
ally and a neighbour to the UAE, but it’s a booming economy worldwide.
There is potential of $1 trillion of investment in India in the next five
years. India is looking for half of that amount to come from abroad. We
6 For instance, total trade between India and Pakistan is estimated around $10 billion, with a potential to grow around $15 to $20 billion; however, due to bad relations only $2.5 billion trade is formally taking place, while $7 to $8 billion trade is taking place via UAE, particularly Dubai. This will definitely feed into UAE share of trade which used to go to Pakistan via Dubai.
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would very much like to see a strong UAE presence in that.”7 At this
occasion, both India and the UAE announced to establish a High Level
Joint Task Force “to explore investment opportunities” in both the
countries.
Indeed, UAE has already been India’s 10th largest investor, investing
nearly $1.8 billion, concentrating mainly in five areas: energy (19.1 per
cent), services (9.3 per cent), programming (7.8 per cent), construction
(6.8 per cent), and tourism and hotels (5.6 per cent). EMAAR Group, RAK
Group, DP World, and Nakheel, Estisalat DB Telecom, are some of the
UAE companies active in India. Table 2 presents the trends in UAE
investments in India.8
Table 2__________________________________
(in $ million)
Year Investment from UAE
Total investment
Percentage of UAE
2000-1 1.58 2907.52 0.052001-2 23.56 4221.89 0.562002-3 15.11 3133.85 0.482003-4 16.81 2634.21 0.642004-5 39.27 3758.94 1.042005-6 49.2 5545.94 0.892006-7 259.9 15726.19 1.652007-8 257.84 24580.95 1.052008-9 257.05 27330.82 0.94November 2009
555.65 19379.60 2.87
Source: Ministry of Trade, UAE.
Correspondingly, the Indians have also emerged as one of the important
investors in UAE. They have invested in several areas such as tourism,
catering, retail, food items, service and manufacturing sector. According
to a recent report issued by Dubai’s Ports, Customs and Free Zone
Corporation, India was Dubai’s top trade partner in 2011, constituting
7India an “ally and cherished neighbour”: UAE Foreign Minister, http :// www . defence . pk / forums / world - affairs /181360- india - ally - cherished - neighbour - uae - foreign - minister . html # ixzz 1 vmnkcZ 92 8 http :// www . moft . gov . ae / images / releasesen /159. pdf
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AED 206 billion or 19 per cent of Dubai’s total foreign trade of AED1.1
trillion last year. The Dubai Chamber of Commerce and Industry has
more than 20,000 Indian companies registered. According to one report
of the Ministry of Foreign Trade, UAE, “The value of Indian investments
in the UAE reached 2.5 billion USD, accounting for 7 per cent of the total
volume of direct foreign investment in 2007 and these investments were
concentrated in manufacturing activities with a total value of $156
million, in the field of construction and contracting with a total value of
$1.5 billion, and $844 million in the rest of the sectors.”9 Major Indian
companies engaged in joint ventures in UAE are Tata, Reliance, Wipro,
NTPC, Larsen & Toubro, Dodsals, and Punj Lloyd, Oberoi, , Hinduja
group, Pioneer Cement.
The growing presence of the Indian business and professional community
in UAE has induced the Indian Trade and Exhibition Centre (ITEC),
Middle East, to publish first-ever official directory. The directory will list
more than 10,000 Indian businessmen. 10 As a part of developing and
mixing up with local business milieu, the Indian Business Leader Forum
(IBLF) at Dubai has undertaken a unique initiative to learn Arabic and
understand the UAE culture with a view to assimilate themselves
locally”.11
UAE- India’s Energy Hope
India is a well know energy-deficient country in the world; it resources 80
percent of its total crude demand from outside and the Gulf meets nearly
60 percent. In this, Iran plays crucial role by supplying 12 percent of the
total. However, under the “Iran Threat Reduction Threat Act (December
9 http :// www . moft . gov . ae / images / releasesen /159. pdf 10 The directory will be released by October 2012. According to Chairman of the ITEC, Mr. Sudesh Aggarwal that the listing of more than 10,000 Indian businessmen in the directory underscore the value of trade and brotherly relations existing for centuries between the two great countries.?
11 Indian Businessmen Vow to learn Arabia in UAE, The Times of India, October 12, 2011. http://timesofindia.indiatimes.com/nri/other-news/Indian-businessmen-in-UAE-vow-to-learn-Arabic/articleshow/10324215.cms
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2011)”, India is under intense pressure from the US to cut or drastically
minimise its energy nexus with Iran; Since 2008-09, nevertheless, India
started diversifying its oil imports, and over the last three years, India
cut nearly 29.5 percent of its oil import from Iran, from 22 MMT in 2008-
09 to 17.5 MMT in 2010-11 and has planned to cut 11.4 percent further,
down to 15.5 MMT for the year 2011-12.
To maintain its growth momentum, India is looking for additional sources
to compensate the Iranian share. This raises the energy significance of
the UAE, which is sitting on 8.8 percent of the global oil reserves with a
shelf life of 100 years. During this visit, the UAE Foreign Minister,
Sheikh Abdullah, assured India that UAE would be a “trusted and reliable
energy partner”. While visiting to UAE, in April 2012, India’s Foreign
Minister S.M. Krishna said: “In United Arab Emirates we have a
dependable supplier of oil. In 2010, we imported 12 million tonnes and in
2011, we increased it to 14 million tonnes. So this would be the
indication at the rate at which our import from UAE is going up.” Now,
UAE has emerged as India’s fourth-largest oil supplier, after Saudi
Arabia, Iraq and Iran. Mr Krishna added that it was decided to set up a
high-level joint task force on investment which will also look into
securing more oil supplies from UAE.12
UAE has also been attracted towards India’s growing petrochemical,
downstream and fertilizer industries. India’s domestic petrochemical
industry is estimated at around $40 billion and is expected to grow at 12–
15 per cent over the next five years.13 UAE’s interest in the matter offers
a huge opportunity, both in terms of finance and getting stable and
secured oil supply at reasonable rates. According to McKinsey, “By 2020,
India has the potential to grow in the speciality chemical industry (dyes,
pigments, pesticides, fertilizer, colourings) from $22 billion to between
12 http :// www . mofa . gov . ae / mofa _ english / portal / b 2 ed 8 c 93-96 f 6-4751-88 b 1-135944 cd 2923. aspx 13 “Petrochemical Industry to Grow at 12-15% a year: Assocham”, http :// www . thehindubusinessline . com / industry - and - economy / article 2885625. ece
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$80–100 billion ... the speciality chemical industry could lead to $20–25
billion investments and can create 7–8 lakh additional jobs.14
India’s fertilizer sector also offers massive scope for cooperation between
the two countries. In 2010-11, India imported around 4.069 million
tonnes of potassic fertilizers, which is its total requirement of this
product. In the case of phosphorus-based fertilizers, during the same
year, India imported 90 per cent of its total demand, around 4.2 million
tonnes.15
India’s downstream industry is one of the largest in Asia. Globally,
between 1999 and 2009, its share in refining capacity grew from 2.7
percent to 3.9 percent. Currently, India has a surplus petroleum
production; its 18 refineries, both public and private, are producing
approximately 184 MMT, while domestic consumption is 130 MMT; by
2013, total production is planned to reach 238.5 MMT. Foreign markets,
especially the East Asian markets, provide a big margin of returns on
investment in this sector. UAE’s interest in India’s downstream sector at
this juncture is a welcome opportunity as both India’s private companies
and UAE’s oil majors can engage and benefit by competing with China,
Singaporean and Middle Eastern refineries.
Increasing cooperation in the energy sector with the UAE will also allow
India to establish a long-term strategic energy partnership. UAE has
approximately 8.8 per cent deposits of the global recoverable oil, and at
the current reserve-to-production (R/P) ratio, its shelf life is estimated at
around 100 years.16
14 “India’s specialty chemical business can grow to $ 80-100 billion by 2020: McKinsey”, The Economic
Times, 8 February 2012, http :// articles . economictimes . indiatimes . com /2012-02-08/ news /31037798_1_ specialty - chemicals - chemicals - industry - mckinsey 15 Economic Survey of India, 2011-12.16 It is estimated that at the end of 2009, Saudi Arabia controlled around 22.4 per cent of the world’s oil deposits; Iraq accounted for 9.8 per cent; Kuwait for nearly 8.6 per cent; and the UAE for 8.3 per cent. In terms of the Arab world, which has 57.8 per cent deposits of the global oil, UAE has 14.4 per cent deposits.
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Migration and Tourism – Building the Bridges
Diaspora and tourism have worked as a two way flow to cement as well
as revive the millennia-old ties between India and UAE. The deep
network established by the diaspora community opened up the scope for
‘people-to- people’ interactions. This promoted tourism in both the
countries. Indian business and working community carried the Indian
ethos and filled the ‘information gap’ about India; this generated strong
urge among the UAE citizens to visit and explore the “Incredible India”. .
At present, Indians are the largest expatriate community, approximately
1.75 million, around 40 percent of total Arab population. Among them, 15
to 20 per cent are professionally qualified, 20 per cent are non-
professionals (clerical staff, shop assistants, salesmen, accountants), and
the remainder (65 per cent) are blue-collar workers.17
However, managing such a huge overseas community, where their own
population has become a minority, has not been an easy task for the
emirates of UAE. Reports of harassment, delayed payment, long working
hours, below-standard residential amenities and lack of health and
hygiene, particularly of female and blue-collar works, are frequently
reported. Realising the gravity of the problem, in 2006, both the
countries signed MoU on Manpower Souring, which again revised in
September 2011, during the visit of UAE Labour Minister Saqr Ghobash
to India. Over the period, the authorities of both the countries undertook
several measures to reduce the avoidable hardships. Among them are:
tightening the recruitment agencies, imparting pre-migration orientation
programme, forming India Mission House with a 24- hours helpline and
establishing the Indian Workers resource Centre (IWRC) at Dubai,
providing a 24-hours helpline; formation of Indian Community Welfare
17 India UAE Relation, http :// moia . gov . in / pdf / UAE . pdf .11
Fund (ICWA) to provide to provide food, shelter, medicines, passage
expenses, etc. to destitute workers/households.18 19
Looking at the growing volume of traffic, the two countries’ aviation
authorities signed a Bilateral Civil Aviation Agreement in 1989, which
again amended in 2004, providing multiple designations of carriers,
following Abu Dhabi’s launch of Etihad Airlines.20 At present, there are
approximately 450 flights per week between India and UAE. This has
helped not only the workers’ community to easily transit but facilitated
the visits of the business community and tourists as well. Underlining the
significance of the Indian travellers, in a press release on 25 April 2012,
Dubai International reported that “India has continued to retain its
position as the top destination country in terms of passenger traffic for
Dubai International ... The number of passengers travelling between
India and Dubai increased by 7 per cent in the first quarter of 2012,
reaching 1,824,307, compared to 1,704,180 during the same period in
2011 ... A total of seven airlines connect Dubai to 17 destinations across
India.”21 The United Nations’ World Tourism Organization forecasts that
more than 50 million Indians will undertake outbound travel by 2020.22 In
2001, UAE received 246,335 Indian tourists, which increased to 336,046
in 2002, 357,941 in 2003 and 356,446 in 2004.23
18 India-UAE Relations, http :// mea . gov . in / mystart . php ? id =50044537
19 During his visit to the UAE in April 2012, India’s Foreign Minister SM Krishna, stressed the need for
understanding the local cultures and traditions so the Indian workers could easily be adaptable. He “asked Indian embassies in Gulf nations to actively engage local governments to better the living and working conditions of millions of Indians in the region, who are the largest contributors of remittances back home” “SM Krishna asks embassies in gulf to look after Indian expats”, Economic Times, 15 April 2012,http :// articles . economictimes . indiatimes . com /2012-04-15/ news /31345303_1_ indian - expatriates - gulf - region - embassies20 http :// moia . gov . in / pdf / UAE . pdf 21 http :// www . dubaiairport . com / en / media - centre / Pages / press - releases . aspx ? id =83 22 Ibid…n. 16. According to Dubai Tourism and Commerce Marketing, more than 700,000 Indian visitors stayed at Dubai hotels in 2011.23 “Indian Tourism Statistics, 2010. Government of India, Ministry of Tourism, Market Research Division”, http :// tourism . gov . in / writereaddata / CMSPagePicture / file / Primary %20 Content / MR / pub - OR - statistics / 2010 Statistics . pdf
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Similarly, India also attracts sizeable numbers of tourists from UAE. In
2007 around 32,750 tourists arrived in India, which increased to 63,502
in 2008. However, in the last couple of years, their number has dipped,
from 47,234 in 2009 to 45,482 in 2010.24 Although the share of UAE
tourists in total arrival of tourists in India, which increased from 1.9
million in 1991 to 12.99 million in 2010, is less than one per cent, their
high per capita income makes them luxury-oriented tourists. On an
average a UAE tourist spends nearly 150,000 Indian rupees. Medical
tourism is a strong segment of UAE tourists visiting India.
Defence and Strategic Cooperation – Need of the Time
India’s growing naval stature in the Indian Ocean on one hand and the
growing menace at sea, including maritime security, piracy, inimical uses
of sea such as smuggling, gun running, trafficking and dugs, have
brought the two countries to cooperate and initiate serious defence and
security dialogues. In June 2003, India and the UAE signed an MoU on
defence cooperation, followed by setting up a Joint Defence Cooperation
Committee (JDCC). Cooperation in defence was supplemented with a
corresponding annual “strategic” dialogue between the two countries.
Potential areas of cooperation in defence fields underlined are: providing
training to UAE defence personnel, production and development of
defence equipment, conducting joint exercises, especially naval and coast
guard, sharing information on strategy and doctrines and regular
exchange of programmes related to security and defence, technical
cooperation in Intermediate Jet trainers, cooperation in military medical
services and jointly combating pollution caused by military at sea as well
as cooperation in defence production industries, etc. At the first JDCC
meeting, the two sides agreed to support defence exhibitions in each
other’s country by deputing its platforms and personnel.25
24 Ibid., n.18.25 http :// www . indembassyuae . org / induae _ bilateral . phtml
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Besides naval engagements, India and UAE have also conducted Joint Air
Force exercises at the Al-Dhafra base in Abu Dhabi. Since 1995, India
has been regularly participating in all international defence exhibitions
(IDEX) organized by the General Exhibitions Corporation of UAE. Some
companies such as Bharat Earth Movers Ltd. and Bharat Dynamics Ltd.
participate in these. The participants have supplied items such as
uniform, boots, etc. to the local Police Department.
During Mr Krishna’s visit, Sheikh Abdullah acknowledged that for
resolving piracy in the Gulf of Aden both countries were working
together “very closely”.
Looking for Enhanced Engagement
There are several potential areas where both countries can engage and
enhance and benefit from their mutual cooperation. Some potential areas
are as follow:
● Establishing Synergy in Hydrocarbons - Indo-GCC Gas Pipeline
Looking at the R/P ratio, UAE’s oil deposits are inexhaustible for the
coming 100 years. This opens a window of opportunity for UAE to offer
India acreages to share and explore its oil-rich regions. Indian companies
such as OVL, IOL and Reliance Petrochemicals have the capacity to
assist, train and finance oil projects in Abu Dhabi, where 90 per cent of
UAE’s hydrocarbons are deposited.
One significant area where India and UAE can engage is building
undersea pipelines. Recently, India and Oman have signed 40-year gas
supply contract of this nature: the gas will be supplied through undersea
pipeline; the cost is estimated around $4.5 billion.26 India and UAE can
also think of extending the Dolphin Project up to the Indian border or the
26 India-Oman Gas Pipeline Plan, PFI Issue 20, http://www.pfie.com/oman-india-pipeline-plan/379319.article 14
Indo-Omani pipeline may be converted into Indo-GCC Gas Pipeline.27
Qatar, which is India’s LNG supplier, may also join the group; Iran may
also join the Indo-GCC Pipeline later on.
India’s domestic pipelines which connects the western coast to the
eastern coast, can convert the Indo-GCC Gas Pipeline into a vehicle to
target the East Asian gas market making India’s eastern coast as ‘hub’.
This will help reduce not only the marine pollution, sea line congestion at
the Strait of Hormuz but also open up Asian gas market to the Gulf
countries, which find touch to sell to the western market, which is also
ready facing the saturation and tough competition with the Russian gas
companies.28 Indo-GCC Gas Pipeline will engage multiple partners; hence
give India a better leverage to manipulate the energy politics.
● Nuclear Power Generation
UAE is among the first nations in the Gulf region to successfully meet all
the procedures for owning nuclear capability for civilian purposes and
has established Emirates Nuclear Energy Cooperation (ENEC) in 2009 to
deliver safe, clean and efficient nuclear energy to the country. In
addition, Abu Dhabi awarded contracts worth $20 billion to South Korean
firms for building the first nuclear energy plant in the country, which is
anticipated to be completed in 2017. Nuclear power will account for 23–
25 per cent of Abu Dhabi’s electricity supply in 2020.29 India is well
known for its nuclear capability as well as for being a responsible nation
in nuclear-related matters. This opens scope for the two countries to
develop a trustworthy relation in this field as well. Although South
Korea’s KEPCO has bagged all the contracts to run the nuclear facilities
in UAE, India may be a reliable partner, particularly offering its rich
experience and manpower services. Another area where India and UAE
27 ? The idea of building an Indo-GCC Gas Pipeline was first suggested by this author in his doctoral thesis. Which is on India-GCC Political Economic Relations in the Post-1990 Period,28 For detailed discussion see this author’s unpublished thesis.29 Ayob Kazin, “UAE’s Future Energy Plan”, Pacific Controls, 17 January 2012, http :// pacificcontrols . net / news - media / uae - future - energy - plans . html
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can work in future is converting silica into thorium. Both countries have
abundant silica resources and India’s third-generation nuclear plan is
based on thorium; the vast silica resources on Kerala beaches will be of
immense help.
● Non-conventional energy sources
UAE has launched a 12 billion dirham Mohammad bin Rashid al
Maktoum Solar Park, which will eventually produce 1000 megawatts of
power. According to the Dubai Integrated Energy Strategy 2030, the
government is looking to diversify the source of energy, defining the
target for renewable energy to supply 1 per cent of Dubai’s energy by
2020 and 5 per cent by 2030: most of it will be solar.30 One of the largest
solar missions in Abu Dhabi is the MASDAR city project. The UAE
government has also established an Ocean Thermal Energy Conversion
(OTEC) unit. Silica is a good source of geo-thermal energy. In all these
fields, India and UAE can share their expertise and resources. Indian
companies such as LANCO and Indo-Solar are doing business and talks
with India’s TERI (Energy Research Institute) are also going on.
However, the two countries need to have a better and more coordinated
pro-active policy in non-conventional sources of energy.
● Islamic Banking and Islamic Finance
India’s vast Muslim population provides a huge market for Islamic
banking and Islamic finance, which operates on “interest-free” (Riba-
free) banking principles. Besides this, India is one of the largest non-
Arab Arabic knowing/speaking countries in the world. This fact will
overcome the language barrier as well. Otherwise, the English-speaking
population has the requisite ability to carry forward business activities,
both in India and UAE. Arabic-speaking India scholars can assist the
emirates to handle their stock exchange-related issues as well.
30 Zaher Bitar, “Shaikh Mohammad launches Dh12b solar power project”, Gulf News, 9 January 2012,
http :// gulfnews . com / business / investment / shaikh - mohammad - launches - dh 12 b - solar - power - project -1.963515 16
● Health and Pharmaceutical
India has acquired an acclaimed status both for providing low-cost world
class medical services as well as low-cost and reliable generic medicines.
Over the past few decades, its pharmaceutical industry has grown to be
worth nearly $24 billion and has now acquired a status of reliability and
confidence, particularly in low-cost life-saving and AIDS medicines. India
can establish a joint medical association and target the Gulf, North
African and the Central Asian regions easily and effectively.
Telemedicine, medical tourism and online treatment are a convenient
mode, which reduces time, expenditure plus provides immediate relief to
the patients. The Indian medical community, including care-workers, has
been globally known for its efficiency and dedication.
● Research and Higher education
India within its scarce resources and in a limited time span has proved its
mettle in education and research. UAE can benefit from India’s
experience and build a strong R&D foundation and nurture an indigenous
“knowledge community”, which will work as a bridge between the two
nations.
● India’s Balancing Act in the Region – Building Trust among Arabs and Persians
Since India has deep historical, political, economic and cultural
relationships with almost all the Trucial and Levant states, plus Saudi
Arabia and Iran, it can play a key role in resolving and minimizing the
trust deficit among all these nations. Looking at the multiplicity of India’s
own society, the Indian model can provide a suitable solution or model to
these countries passing through a high phase of transformation.
Coexistence, secularism and liberal democratic setup may be helpful in
reducing as well as minimizing the acrimony arising in the form of Shia-
Sunni divide, Arabs versus Persians and inter-tribal conflicts. India is the
17
second-largest home of Muslims in the world, with the second-largest
Shia population after Iran. Its system has well absorbed as well as
handled not only the different religious groups but also ethnicities, races
and regional diversities.
● Defence and Strategy - Contingency Planning
Since 2003, although both countries have started their engagements in
defence and on a limited scale in strategic fields by holding an annual
strategic dialogue, looking at the growing instability in the region in
general and on the seas in particular, the two countries need to expand
their engagements more widely and thoroughly. The growing menace of
piracy, alliance of pirates with terrorism, termed as “terro-piracy”,
increasing inimical uses of the seas in the region on one hand and UAE’s
vulnerability and India’s growing naval capability on the other, make
close naval-related relationship between the two countries a pragmatic
affair. In recent years, Somalia has become notorious not only for piracy
but also for allying terror groups such as al-Shabab with Yemen-based
AQAP (al-Qaeda of Arabian Peninsula). About 25,000 ships transit
annually through the Gulf of Aden. Looking at the threat to the narrow
Strait of Hormuz, through which one-fifth of the world oil passes daily,
India and UAE along with other Gulf littoral countries such as Bahrain,
Kuwait and Oman need to move at a higher level of defence deals.
Another strategic area where India, which enjoys close relations with
Iran as well, can play a key role as mediator to help UAE is to resolve its
dispute with Iran on the three islands, Abu Musa, Greater Tunb and the
Lesser Tunb, which are under Iran’s occupation since 1971.
Other areas where India and UAE can cooperate and work together are:
climate, managing marine pollution, ensuring better transit of oil though
the Strait of Hormuz, as well developing joint mechanisms in tackling
piracy, water desalination, developing crop seeds suitable to arid and hot
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regions, and cooperation in aquaculture and fisheries, etc. India’s
peninsular shape makes it a natural maritime power in the Indian Ocean.
The Ignored Horizons
There are also some grey areas where the two countries need to work
and improve their existing relationships. Foremost is the labour issue.
India is the largest supplier of human resources to the UAE; the Indian
citizens in UAE play a crucial role in developing and sustaining UAE’s
growth and development. However, the interest of the expatriate
community is not effectively protected; neither are they adequately
covered with welfare programmes. Kharjis (expatriate workers) are
differently treated in terms of wage, working hours, and residential and
medical facilities. The women migrant workers have their own specific
problems. Although the two countries have signed a manpower
agreement in 2006 and revised it in 2011, there is slow progress in
implementing their provisions. Some issues like minimum wage,
provision of pension, health insurance and developing some mechanism
to safeguard loss against currency fluctuation to the expatriate workers,
should also be taken under consideration.
Issues like black money, extradition of criminals residing in various parts
of UAE, balancing bilateral relations between India and Pakistan also
need serious policy consideration by UAE authorities. This will not only
add momentum to India-UAE bilateral relations but also help raise the
image of UAE, in terms of soft power, among common Indians.
Prescient Thoughts
The changing strategic configuration in the Gulf has created a new
permutation and combination both in terms of strategic and economic
interests. Europe is facing crisis and the US economy is in doldrums,
while the Indian economy shows promise. The reasons for India’s positive
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outlook might be the sustenance of the services industry and less
reliance on exports. Importantly, the new region of the Indian Ocean is
gaining international attention. In the 6th policy document which was
released by the US in January 2012, it was stated that the Indian Ocean
as a region is gaining critical mass both in terms of economic sustenance
and increasing interdependence. Also, the revival of the IOR-ARC
through India has propelled new developmental objectives and better
integration of production and manufacturing networks, showing new
alternatives to the globalizing world. IONS (Indian Ocean Naval
Symposium), which was seen as an informal gathering, is now getting
better attention to the extent that the West Pacific Naval Symposium and
IONS are stated to be integrated together for better naval and maritime
monitoring. This helps India’s purpose, strategically and economically as
well.
The countries of the Gulf region have been eying India for governance
and structural reforms and also to bring about incremental change in
governance structures. In this light the visits of the high-level Indian
delegations to Oman, Qatar and Bahrain, which included military
delegations supplemented with return visits from these countries, show
the increasing relevance of the region for India. Chinese ships that have
been deployed in the Gulf of Aden have been visiting these countries and
docking at their ports both for entertainment and refuelling. This
provides India the required strategic angle to engage with these
countries. In this context, UAE emerges as one country which is seen as
an important hub: the historical and cultural linkages provide the
necessary foundation for a closer strategic relationship between the two
countries.
India’s relationships with the Gulf region in general and the UAE in
particular has although been more than 3000 millennium old; the
connection between security and stability between the two countries has
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been realised for the first time in 1981 when Mrs. Indira Gandhi visited
and met the UAE President Shaikh Zayed. Both the leaders explicitly
stated that “peace in one region was important for peace in the other
region”.31 Sheikh Zayed said “at a regional level, we also look forward to
an increased involvement by India in issues affecting the Gulf and
neighbouring countries” and that “it is in both of our interests to work
together more and more closely.32 In 2005, India propounded the “look
west policy” and acknowledged Gulf as its extended neighbourhood and
expressed to share the fruits of India’s growth and development with the
Gulf countries, including the UAE.
Over the period, India has developed some significant stakes in the
region; its more than 6 million diaspora community with 29 percent (1.75
million) are working and living in the UAE alone; they are religiously
remitting more than $35 billion annually to India; India carries out
approximately $120 to $130 billion trade with the region with UAE as its
largest trading partner; and moreover, India resources 60 percent oil
from the region in general and more than 10 percent from the UAE in
particular.
Looking at the transforming security scenario in the Gulf of Aden,
particularly the growing and expanding menace of piracy and threat to
the safety and security of the merchant shipping on one hand and India’s
growing naval stature in the Indian Ocean on the other, brought both the
countries to seriously engage into security and strategic dialogues.
31 Gulshan Luthra Peace in the Indian Subcontinent and Strategic Gulf Interlinked: India and UAE Exemplify Friendship, June 27, 2007, http://www.indiastrategic.in/topstories19.htm32 Ibid., n.6.
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