Dawn of a new era in the India-UAE economic and political relations

Dubai: The upcoming visit of His Highness Shaikh Mohammad Bin Zayed Al Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces, to India this January to be the chief guest at the country’s Republic Day Celebrations is being viewed as another sign of the strengthening bi-lateral relations between the two countries.

Since the visit of Prime Minister Narendra Modi’s visit to the UAE in August last year and a subsequent four day visit by Shaikh Mohammad Bin Zayed in February this year, Indo-UAE relations have become much closer and stronger, according to Neeta Bhushan, Charge d’ Affaires at the Indian Embassy in Abu Dhabi.

“India and UAE have centuries-old bilateral partnership. During the visit of Indian Prime Minister Narendra Modi to the UAE in August 2015, both sides agreed to elevate our bilateral relations to a new comprehensive strategic partnership. This was followed by the visit of His Highness Shaikh Mohammad Bin Zayed Al Nahyan, to India in February 2016,” said Bhushan. India’s Republic Day is on January 26.

Though India and the UAE have had historical ties, no Indian prime minister had visited the country in over three decades, the last one being by the then prime minister Indira Gandhi in 1981.

“Though the historic relationship between UAE and India has been strong with a legacy dating back to centuries, but in recent years it has gone to a totally different height. Especially after Indian Prime Minister Narendra Modi’s visit last year followed by Shaikh Mohammad Bin Zayed’s visit earlier this year, suddenly the Indo-UAE relations have become much closer and stronger, and this can only become better in coming years,” said Yousuf Ali M.A, Chairman of Lulu Group and Abu Dhabi Chamber Board member.

Clearly the current government in New Delhi is keen on pushing forward the strategic nature” of bilateral relations between these two traditional friends as they work to forge an overarching and deepening engagement that’s being described as a strategic government-to-government partnership.

In the context of the deepening relations between the two countries, analysts attach great importance to the visit. After late Saudi King Abdullah Bin Abdulaziz Al Saud in 2006, Shaikh Mohammad will be the most prominent Arab leader in recent years to be invited as the chief guest at India’s Republic Day. The list of global leaders who were invitees to the event in the recent years includes French President Francois Hollande (2016), US President Barack Obama (2015), Japanese Prime Minister Shinzo Abe (2014), French President Nicolas Sarkozy (2008) and Russian President Vladimir Putin (2007).

Economy & foreign policy

In the overall realignment of its foreign policy goals, India sees it relations with UAE central to its coordinated strategy in international relations spanning, economic, political and strategic interests. Shaikh Mohammad’s visit comes at a time when the Indian economy is opening up more sectors to foreign investments and is seen as among the few bright spots in a world economy that is witnessing a slowdown.

India’s economy is recovering strongly, the International Monetary Fund (IMF) has said in its latest assessment of global growth, bumping up the country’s growth forecast for the current and next year as it warned of subdued global growth that could fuel protectionism.

In its update of the World Economic Outlook (WEO), the IMF has forecast India will grow 7.6 per cent this fiscal and next, up from 7.4 per cent estimated in July for both the years. “India’s economy continued to recover strongly, benefiting from a large improvement in the terms of trade, effective policy actions, and stronger external buffers, which have helped boost sentiment,” the IMF said in its report.

Last week the World Bank said India’s GDP could grow 7.6 per cent in 2016-17 and 7.7 per cent in 2017, supported by expectations of a rebound in agriculture, civil service pay reforms supporting consumption, increasingly positive contributions from exports and a recovery of private investment in the medium term.

“The visit reinforces the UAE’s trust in Indian economy as bilateral trade between the two countries goes up. We expect investments from the UAE to increase in a wide range of sectors including infrastructure development, clean energy, real estate and defence industry. With a growth rate of 7.6 per cent, India is an ideal place for investment,” Dr B.R Shetty, Chief Executive Officer of NMC Health.

A lot is at stake for both countries as both sides push for closer economic ties and seek to draw more investments. The UAE is the tenth biggest investor in India. According to January 2015 figures, the total foreign direct investment (FDI) from the UAE to India was estimated to be $3.01 billion.

During Modi’s visit last year, the two sides had agreed to establish an UAE-India Infrastructure Investment Fund, setting an ambitious target of $75 billion to support investment in India’s infrastructure. Both sides have set up a task force to nudge investments under this fund.

The growing warmth in the relations between the two countries has set expectations soring among the business community. “Indians have been investing in UAE for a long time and have developed several businesses here. We have also seen active interest from various UAE government related entities as well private families from UAE showing interest to do more in India. As part of the business community in UAE I hope it will lead to more bilateral trade and better investment environment between the 2 countries,” said Shailesh Dash, Entreprenuer and CEO of Al Masah Capital.

Security and counter terrorism

Going beyond the mutual economic opportunities, diplomatic circles view that the visit by Shaikh Mohammad sends out an important message at a time when tensions are escalating in South Asia and there have been a wide consensus on the need to work in a coordinated manner to fight the menace of terrorism and extremism.

In recent years, UAE, like Saudi Arabia, have embarked on a closer relationship with India on security and counter-terrorism in addition to growing business relations. Security experts who are keen observers of subcontinental geopolitics say that the visit will further deepen the strategic partnership between India and the UAE. Clearly both countries seem eager to seize the opportunity to expand bilateral ties as they see growing synergies in a rapidly transforming world.