On Tuesday, Dubai's iconic Burj Khalifa was illuminated with the Indian tri-colour. It was a special gesture to acknowledge the record seventh visit of Prime Minister Narendra Modi to the United Arab Emirates (UAE) in the last nine years.
The signalling is understandable, given that in 2015, Modi was the first Indian Prime Minister to visit UAE in 34 years. This diplomatic neglect is baffling. Not only is West Asia crucial to the country's energy security, but the UAE is also home to 3.5 million expat Indians.
In the nine years since, the relations between the two countries have grown exponentially, making up for lost time as it were.
In fact, in the last eight months, there have been five high-level visits between the two countries. Prior to his latest visit, Modi made trips to the country in July and November. Similarly, his counterpart, President Sheikh Mohamed bin Zayed, visited India in September and was the chief guest at the just-concluded Vibrant Gujarat.
Force Multipliers
This personal chemistry between the two leaders has catalysed diplomatic action, allowing their economies to benefit from each other's strengths.
As S. Jaishankar, India's foreign minister, observed in his new book, Why Bharat Matters, "So much of diplomacy is about chemistry and credibility that the human factor is always central to an accurate judgement". Undoubtedly, the presence of a sizeable number of Indian expats-gradually pivoting from blue-collar to white collar-is providing the desired social glue to the relationship.
The size of their combined economies is over $4 trillion, providing India-UAE considerable heft-especially at a time when most parts of the world economy are struggling-to become a force multiplier in the Arabian Sea region; coincidentally, a region growing rapidly and flush with investable petro-dollars.
Trade Gateway
The recent turn in geopolitics, especially the attacks by Houthi terror outfits on merchant ships using the Red Sea corridor to access Europe, have put the spotlight on the ambitious India-Middle-East-Europe-Corridor (IMEEC) project, a deal shepherded jointly by the United States and India and inked on the sidelines of the summit G20 meetings in New Delhi.
It seeks to offer an alternative multi-government and multi-modal (road, rail, and ship) route to Europe from India through the Middle East, instead of the traditional route through the Red Sea and later the Suez Canal.
Westbound trade from India will be moved by ships and make landfall in Jebel Ali port, owned and managed by DP World, in the UAE. From there, goods will be transported by freight train to Israel through Jordan. And from there, goods will transit via ships to Europe. Given that each partner country is a stakeholder, they are invested in servicing and protecting the supply chain against disruptions.
Not surprising then that Modi's visit formalised the contours of this regional connectivity agreement with particular emphasis on logistics and securing supply chains to facilitate the speedy flow of general cargo, bulk containers, and liquid bulk cargo.
Alongside, the two countries also signed an agreement to strengthen energy security and promote energy trade, with a special focus on production and storage of green hydrogen. To enhance capital flows between the two countries and protect existing investments, a bilateral investment agreement was also inked. Together with another deal on promoting digital public infrastructure-India's global calling card-they seek to put trade and investment on the fast track.
Against The Global Odds
These agreements have to be seen in the context of the Comprehensive Economic Partnership Agreement (CEPA) the two countries inked in 2022. Coincidentally, the second anniversary of the signing of this watershed agreement is on February 22, just a week after the meeting of the two leaders.
CEPA reinforced the strong trade ties between the two countries. In fact, the UAE is now India's second-most important trading partner. Trade data sourced from the commerce ministry show a significant jump, despite the downswing in the global economy. Especially when we compare it to the trends prevailing prior to the disruption caused by the Covid-19 pandemic. The total trade between the two countries grew from $59.12 billion in 2019-20 to $84.84 billion in 2022-23-an increase of 43.6%.
The two countries are building on this foundation to also integrate their respective financial sectors to facilitate seamless cross-border transactions. The Unified Payments Interface (UPI), the inter-operable payment bridge that is averaging over 12 billion transactions domestically, is now usable in the UAE. During the visit, the two leaders launched UAE's JAYWAN card, with an interface with the UPI-backed RuPay card. Further, the central banks of both countries are exploring digital currencies to pay for the growing trade between them. Not only will this reduce the dependence on dollar-based trade, it will also accelerate regional economic cooperation and enable quick settlements.
In the final analysis, it is clear then that the India-UAE relationship may have got off to a late start. But growing convergence between economic priorities at home and foreign policy objectives are providing the extra boost to make up for lost time.
(Anil Padmanabhan is a journalist who writes on the intersection of politics and economics.)
Disclaimer: These are the personal opinions of the author.