Why in the News?

During Sheikh Khaled’s recent visit, new cooperation agreements were signed, including those related to civil nuclear technology and renewable energy, showcasing the commitment to collaborative advancements in critical sectors.

Evolving Bilateral Relations:

• In 1972:  India and the UAE bilateral relationship has been formalized since the establishment of diplomatic relations in 1972, gaining momentum with high-level visits and agreements over the years.
• In 2015: The greater push was achieved when the visit of India’s PM to the UAE in August 2015 marked the beginning of a new Strategic partnership.
• In 2017: The relationship was elevated to a Comprehensive Strategic Partnership in 2017, during the visit of the Crown Prince of Abu Dhabi to India in January 2017 as the chief guest at India’s Republic Day.
  • The UAE is India’s third-largest trading partner and a significant source of investment.
• Today, the UAE hosts over 3.5 million Indian expatriates, which strengthens cultural ties and economic collaboration.

Present Scenario of Strategic Development

• Trade and Investment Growth: Bilateral trade reached approximately USD 85 billion in 2022-23, with goals to increase it to USD 100 billion by 2030.
  • The UAE has become a significant investor in India, with FDI from the UAE surging to USD 3.35 billion in FY23.
• Comprehensive Economic Partnership Agreement (CEPA): India and the UAE signed a CEPA in February 2022, with India being the first country to secure such a deal with the UAE. This agreement led to a 15% rise in bilateral trade within its first year of operation.
• Regional Ties: India and the UAE are actively engaged in various regional groupings and initiatives such as the I2U2 and the India-Middle East-Europe Economic Corridor (IMEC), reflecting shared interests and strategic alignment.
• Energy Ties: The UAE plays a crucial role in India’s energy security, with strategic oil reserves stored in India.
• Fintech Ties: Since August 2019, the RuPay card, India’s domestic card payment network, has been accepted at 21 businesses and 5,000 ATMs across the UAE. This makes the UAE the first Gulf nation to adopt the Indian payment system.
• Cultural Ties: India participated as the Guest of Honour Country in Abu Dhabi International Book Fair 2019. Indian cinema/TV/radio channels are easily available and have good viewership.

• • The inauguration of the Indian Institute of Technology (IIT) Delhi’s Abu Dhabi campus marks a significant milestone, representing India’s growing educational influence in the UAE.

Challenges in India-UAE Relations

• Labor Rights and Kafala System: Concerns regarding the treatment of Indian expatriates under the Kafala labor system necessitate diplomatic engagement to improve labor rights and welfare.
• Geopolitical Balancing: As India strengthens its ties with the UAE, it must navigate its relationships with other Gulf nations and maintain a balanced approach to regional conflicts, such as the Chinese market dominance and the Israel-Palestine issue.
• Economic Diversification: While trade is growing, there is a need to diversify economic cooperation beyond traditional sectors like energy and real estate to include technology and innovation.

Way forward: 

• Strengthen Labor Rights Cooperation: India and the UAE should engage in continuous diplomatic dialogues to reform labor practices, improving the welfare and rights of Indian expatriates under the Kafala system, and ensuring a more humane and fair working environment.
• Diversify Economic and Strategic Cooperation: Both countries should focus on expanding collaboration into emerging sectors such as technology, innovation, and renewable energy while maintaining geopolitical neutrality and balancing relations with other Gulf nations.

Mains PYQ:

Q How will I2U2 (India, Israel, UAE and USA) grouping transform India’s position in global politics?  (UPSC IAS/2016)

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