In a welcome development, India and the United Arab Emirates (UAE) are set to sign a major trade pact negotiated in record time. On Friday, in a virtual bilateral summit hosted by Prime Minister Narendra Modi and Abu Dhabi Crown Prince Sheikh Mohamed bin Zayed, India and the UAE will be signing the Comprehensive Economic Partnership Agreement (CEPA) which will act as a precursor to a major Free Trade Deal between the oil-rich Gulf nation and India.
The much anticipated virtual summit is taking place at a time when India is celebrating 75 years of independence and the UAE is marking its Year of The 50th which shall last till March 31, 2022. This deal with the UAE, a leading member of the Organisation of Islamic Countries (OIC), is unprecedented in many ways.
It is pertinent to note that negotiations for the India-UAE CEPA were launched in September 2021, making it a major bilateral trade deal agreed upon in record time for India. It is being termed as an ‘early harvest’ deal and will lead up to a major FTA, one that would serve as a template for other nations that India is in talks with for trade deals, including the United Kingdom, Australia and the European Union.
With a focus on gems and jewellery exports from India, the CEPA shall prove beneficial for the Indian export market. India is also keen to step up its apparel and electronics exports to the lucrative West Asian market.
As India’s third-largest trading partner after the USA and China, the UAE is set to jack up trade with India and plans to raise it to $100 billion, according to Money Control. In 2021, bilateral trade between India and the Emirates stood at $43.3 billion and was tipping towards the $60 billion mark before the pandemic struck. With CEPA and a waning economic effect of Covid, the trade volume is slated to rise substantially.
Modi and Bin Zayed usher in a new era
After seven years of tremendous growth in the two-countries ties, Prime Minister Narendra Modi and Crown Prince Mohamed Bin Zayed are ushering a new era in India-UAE relations, amping up security, economic as well as cultural ties. The new trade deal is an unprecedented step towards bringing the two nations closer and an imprint of PM Modi’s diplomatic sway in the Middle East.
In fact, there is a personal bonhomie between PM Modi and Crown Prince Bin Zayed that drives this relationship to greater heights. The two nations cooperated closely during the pandemic with UAE committing to the welfare of the 3.5 million-strong Indian community living there. The Air Bubble agreed in August 2020 has helped most Indians to return back for employment and business. India remains the top remittance destination for the Emirates and absorbed 33.6% of the total outflow in 2021, according to Khaleej Times, amounting to more than a trillion rupees.
From $3 billion in 2014, investments from the UAE in India have registered nearly a six-fold increase to $17 billion. In a snub to Pakistan, business groups from the Emirates are also investing in a post-Article 370 Jammu and Kashmir, strengthening India’s position on Kashmir in the community of Muslim nations.
Defence and security relations are also soaring between India and the UAE. The UAE has helped in the overflight of the Rafale aircraft from France to India. There have been two visits by India’s Army Chief and Chief of Air Staff as well in the last two years. India also participated in the IDEX and NAVDEX 2021 exhibitions in Abu Dhabi, and the Dubai Air Show in 2021. In fact, in the Dubai Expo, India was allotted one of the biggest plots and was given the right to retain the Indian Pavilion even after the Expo. As non-permanent members, both India and UAE are also coordinating positions in the United Nations Security Council.
In terms of energy cooperation, a transformation in dynamics has already been witnessed with UAE’s participation in India’s strategic reserves and its offer to Indian companies to develop stakes in two oil fields. As the third-largest supplier of crude oil and the second-largest supplier of LNG to India, UAE is keen on taking energy cooperation to the next level with a focus on renewables.
Not only this, but under Bin Zayed, the UAE has become an oasis of religious harmony in West Asia. A Hindu temple, a first of its grand nature in West Asia, is being built in the UAE. In fact, Abu Dhabi has provided a large plot of land for a grand stone temple which members of the Bochasanwasi Akshar Purushottam Swaminarayan Sanstha (BAPS) say will stand strong for a thousand years. Indeed, the temple would serve as a symbol of harmony and tolerance in the UAE and its great ties with India.
In all, the UAE’s warm relations with India send a strong message to the detractors of communal harmony be it in India or abroad. The soaring trade between the two is icing on the cake.
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