Indian Prime Minister’s visit to UAE: Challenges and Opportunities

Indian PM’s visit to UAE after a long gap of three decades on 16^th July 2015 has provided a new hope among the people and investors of these two countries.The historic relations between these two countries have existed since 3000 BCE. Barter trades for clothes and spices in exchange of dates and pearls and people to people contacts have existed for centuries.  After the creation of UAE federation in 1971, the relationship flourished between the two countries. The centuries old cultural and economic links have been the foundation for state level relationship.

Currently, UAE has more than 1 million Indians – the largest migrant group in the country. The Indian expatriates have contributed significantly in the development of the UAE economy from the beginning.   It is also worth noting that Indian expatriates send a hefty amount of US$15 billion to their home country, which accounts for 20% of India’s total remittances.

However, the UAE-India’s relations have not matured even though having a long historical background. The ongoing support for Pakistan on Kashmir issue by the UAE government has caused a friction in Indo-Emirati relations. The various incidents related to poor working condition of Indian expiates is another concern for the Indian government. No interactions at the state level for the last 34 years also damaged the relations heavily.   Even Indian PM Narendra Modi acknowledged that the relationships between the two governments haven’t advanced much, during his interaction with media in Delhi on Saturday. That’s why; Modi’s visit to UAE can be a step in a right direction to forge mutual beneficial relations for both the countries.

The major issues discussed during his visit :

Trade and Investment

The trade between India and UAE has crossed $59 billion, according to FY 2014-15 reports. Indian exports to UAE worth for $33.3 billion, and UAE exports to India stands at $26 billion. UAE is the third largest trading partner for India. The flow of goods and services, capital and manpower is the main driver of this bi-lateral trade. The BIPP Agreement (Bilateral Investment Promotion and Protection Agreement), 2013 which was meant to boost the investor’s confidence and provide much needed institutional framework has certainly helped in increasing the bi-lateral trade, but at the investment level not much has been achieved. For example, UAE investment in India stood at merely $4 billion. It is therefore imperative for both the countries to increase bilateral investments in order to align with the growing trade profile.

 

India is also looking for a big token investment in infrastructure through UAE government linked entities. The ‘smart city’ project of Indian government can also get a boost if Indian PM would be able to convince his counterpart.  Modi’s priority list may also include seeking investment from UAE, whose sovereign reserve wealth fund is estimated to roughly $800 billion. The stalled GCC- India Free Trade Agreement also needs a push in order to increase the regional trade with Gulf countries.

Overall, a strong bilateral relation can help India to get the much needed investments in infrastructure sector.

Indian Expatriates

According to Government data, more than 2 million people currently live  in UAE.  According to some estimates, they make 30% of the total population of the UAE. Indian PM will speak to large expatriates during his visit as he has made it a point to address the Indian community in every foreign visit. But the profile of Indian population in UAE is very different from the Indian diaspora in US or Europe. In UAE, only 20% of total Indian expatriates are in high skilled professions, and majority of work force are in unskilled or semi-skilled profession.  The working condition in UAE for Indian workers is disappointing and sometimes they work and live in a very inhuman condition. So, in UAE, the Indians might be not interested in listening to the development initiatives going in India, but they would like to know how this visit will help in betterment of their lives and working conditions. It is expected that Mr. Modi will have a discussion on this issue with UAE government.

 

Security

India lacks a comprehensive agreement with the UAE in fighting terrorism. It is well known that Pakistan uses UAE as an offshore base for anti-India terrorism. Indian government has failed to bring UAE on the board in fighting the decades old Pakistan sponsored terrorism. UAE government supports Pakistan’s stand on Kashmir issue and it will be one of the difficult areas for the Indian PM to show his diplomatic skills. The Islamic State threat is looming large for the Indian migrant workers in the West Asia as many Indians are still under captivity of them. The UAE government is also concerned about this alarming situation. It may be the right time for the Indian government to forge a counter-terrorism framework in partnership with the UAE. It will provide India a reliable security partner in the Gulf-region which is home to 28 million Indian migrants.

Another concern for Modi government is growing presence of Chinese navy in the western part of the Indian Ocean.  Probably, he would aim to bring UAE under the India’s Defense Agreement in such a way that this strategically important geographical area is not conceded to Chinese navy.

This is an opportunity for the Indian government to materialize the deep demographic and geographic connections to the UAE to project India as an ideal partner for stabilizing the entire Gulf region.