PM Modi visited Abu Dhabi on 15th July 2023, while returning from Paris to New Delhi. In a special gesture, PM was warmly welcomed by Crown Prince of Abu Dhabi, Sheikh Khaled bin Mohamed bin Zayed Al Nahyan at the airport. A ceremonial welcome and Guard of honour were accorded to PM Modi.

Key Meetings:

PM met Sheikh Mohamed bin Zayed Al Nahyan, President of the UAE and the Ruler of Abu Dhabi over delegation level and one-on-one talks in Abu Dhabi on 15 July 2023.

The two leaders held wide ranging discussions covering various dimensions of the bilateral partnership, including trade & investment, fintech, energy, renewables, climate action, higher education and people to people ties. The discussions also covered regional and global issues

The two leaders witnessed the exchange of three significant documents:

a) MoU between RBI and UAE Central Bank for the establishment of a framework to promote the use of local currencies (INR - AED) for cross-border transactions

b) MoU between RBI and UAE Central Bank for the bilateral cooperation on interlinking their payment and messaging systems.

c) MoU between Ministry of Education of India, Department of Education and Knowledge, Abu Dhabi and IIT Delhi for planning to establish IIT Delhi - Abu Dhabi, UAE

d) A Joint Statement was issued after the meeting.

PM noted that India and the UAE trade witnessed a 20 per cent increase since the signing of the Comprehensive Economic Partnership Agreement (CEPA) last year. "For the first time, we have achieved $85 billion in trade and soon we will achieve the target of $100 billion. If we decide, we can cross this milestone before the G20," PM said as he and the UAE president witnessed the exchange of the MoUs.

The UAE side appreciated the hosting of the Voice of Global South Summit by India in January 2023. The Indian side also commended the UAE for its instrumental role in promoting the Global South's interests at COP28 and making COP28 a "COP of action.”

Both sides also looked forward to further cooperation in plurilateral fora such as I2U2 and the UAE-France-India trilateral cooperation initiative.

The leaders reiterated their resolve to further strengthen investment ties between the two countries. In this context, they appreciated the efforts of the bilateral High-Level Joint Task Force of Investments. They acknowledged that the UAE became the fourth largest investor in India in 2022-2023, compared to the seventh in 2021-2022.

They appreciated the plan of Abu Dhabi Investment Authority (ADIA) to set up a presence in Gujarat International Finance Tec-City (GIFT City), a financial free zone in Gujarat, in the next few months. This will further facilitate investment opportunities for the UAE in India.

The leaders resolved to further enhance bilateral partnership in the energy field, both in oil, gas, and renewable energy. Both sides will take forward their cooperation in Green Hydrogen, solar energy and grid connectivity. Both sides also agreed to increase investment across the energy spectrum, including in India’s Strategic Petroleum Reserve Programme.

Recognizing the importance of food security, the leaders reiterated their resolve to promote the reliability and resilience of food supply chains and expand food and agriculture trade, including through food corridors projects in India. 

The leaders agreed to further strengthen bilateral collaboration to strengthen maritime security and connectivity in the region to promote prosperity in India, the UAE, and the shared neighbourhood. They also agreed to enhance defence exchanges, sharing of experiences, training, and capacity building.

PM Modi met Dr. Sultan Al Jaber, President-designate of CoP28 and Group CEO of Abu Dhabi National Oil Company in Abu Dhabi on 15 July 2023.

The discussions took place on the forthcoming COP-28 of UNFCCC under UAE's Presidency. Dr. Jaber briefed PM on UAE's approach to this important meeting. PM conveyed India’s full support to UAE for its COP-28 Presidency. PM also highlighted India's efforts and initiatives to address climate change, including International Solar Alliance, Coalition for Disaster Resilient Infrastructure, International Year of Millets and Mission Lifestyle for Environment (LiFE). The discussions also covered energy cooperation between India and UAE.

The two leaders adopted two joint statements, including one specifically focussing on cooperation on climate change. They underscored the urgent need for developed countries to fulfil the $100 billion delivery plan and highlighted the importance of the global stocktake (GST) of collective action to achieve the goals of the Paris Agreement.

Assessment

The relationship between India and UAE has many firsts to its credit. UAE was the first country PM Modi visited after being sworn in. Even though UAE and other GCC countries are barely couple of hours away the relationship was marred by absence of high level interactions for over three decades. Again, the first country in the region with which India has a Comprehensive Strategic Partnership. UAE also has the unique distinction in the West Asian region of hosting the largest Indian diaspora of over 3.3 million and consequently the increased remittances.

Both sides noted that this was the fifth visit of PM Modi to the UAE in the last eight years. PM last visited the UAE in June 2022 when he visited Abu Dhabi to meet HH Sheikh Mohamed bin Zayed Al Nahyan to convey his greetings as His Highness assumed the Presidency of the UAE.

In 2015, PM Modi became the first Prime Minister of India to visit the UAE in 34 years. This visit was followed by the visit of HH Sheikh Mohamed bin Zayed Al Nahyan to India in 2016, then in 2017, when HH Sheikh Mohamed bin Zayed Al Nahyan was the Chief Guest at India’s Republic Day celebrations.

Moreover, the India-UAE relationship was formally elevated to a Comprehensive Strategic Partnership during the visit of HH Sheikh Mohamed bin Zayed Al Nahyan to India in 2017.

The UAE has become India’s gateway to West Asia, with the two nations forging strategic alliances in areas such as energy, food security, and trade.  Ties with UAE have moved from energy, trade and investment relations, to the frontier areas on technology that embraces such diverse sectors as food security, AI, communications, renewable energy, trade logistics, robotics in the health sector and space. UAE is not only a big market, but also a big source of investment in India.  It had approved $75 billion for investment in India.

The Russia-Ukraine war has exposed global vulnerabilities in the energy and food sectors. While West Asia and Africa were significantly impacted in terms of wheat supply, Europe and other regions faced immense pressure due to the energy crisis. In response, India has taken significant diplomatic measures to safeguard its energy interests. In return, the UAE is turning to India for its food security.

In the face of growing Chinese influence, India is seen as the primary alternative and a strategic partner for the West Asia.  For India, the UAE is considered an extension of India's neighbourhood, and it is crucial for New Delhi to leverage the strong friendship between the two leaders to counter any aggressive moves by Beijing.

Even in the so called western QUAD or Quartet I2U2, UAE is a critical partner with Israel and USA where several projects including $2 billion Emirati investment in Food Parks is already in pipe line.

Likewise, India and UAE form an integral part of new arrangement with USA and Saudi Arabia focusing on infrastructure and connectivity (IUSU). India has restarted negotiations for the India-GCC FTA and partnership in which CEPA can be a ready format.

As such the trilateral between India-UAE-France has been consistently identifying newer areas of security cooperation, especially given the fact that UAE is as much a part of the Indian Ocean Initiatives including IORA and Indo-Pacific Oceans Initiative (IPOI) which are critical for closer maritime security and connectivity.

One will have to see if the recent decision on the Indo-Pacific Framework for cooperation agreed in Paris, will extend to eventually include UAE as well. Logically it might. Likewise, Cooperation in Africa with India could be a new trilateral initiative either with France or with Israel or both for ensuring food and maritime security.

As regards the Memorandum of Understanding (MoU) for establishing a framework to promote the use of local currencies, the Indian Rupee (INR) and the UAE Dirham (AED), for cross-border transactions it is first of its kind, and is aimed at putting in place a Local Currency Settlement System (LCSS) to promote the use of INR and AED bilaterally. It covers all current account transactions and permitted capital account transactions. The creation of the LCSS would enable exporters and importers to invoice and pay in their respective domestic currencies, which in turn would enable the development of an INR-AED foreign exchange market.

This arrangement would also promote investments and remittances between the two countries. Use of local currencies would optimise transaction costs and settlement time for including for remittances from Indians residing in UAE.

The MoU on ‘Payments and Messaging Systems’ will set the stage for linking the Fast Payment Systems (FPSs) of the two nations –the Unified Payments Interface (UPI) of India with the Instant Payment Platform (IPP) of UAE. It will link the respective Card Switches (RuPay switch and UAESWITCH). It will also explore the linking of the Structured Financial Messaging System or SFMS of India with the messaging system in the UAE.

These two MOUs put together important segments of the ecosystem in economic engagement that brings about ever increasing greater strategic economic convergence between the economies of India and the UAE.

Therefore, UAE is an important neighbour of India as it has the largest diaspora in the GCC countries.  With CEPA, it has become India’s third largest trading partner for the year 2022-23.  India is UAE’s second largest trading partner.  UAE has also become the fourth largest investor in India.  With the three important MoUs, both countries have resolved to enhance bilateral partnership in energy fuel, food security, health sector, maritime security, fight against extremism and terrorism.  India and UAE also emphasised importance of multilateralism and promoted a just and rules based order.  UAE also supported India for a permanent seat at UN Security Council.

The historical people-to-people contacts are one of the strongest pillars of the India-UAE ties.  The UAE had expressed appreciation that the diaspora continued to play a significant role in society and economy of the UAE and further reinforcing bilateral relations.

In conclusion, since challenges of a transitional order are confronting the world, including India, the UAE, PM Modi’s visit was a timely reiteration of the importance of this pivotal comprehensive strategic partnership and to reemphasise and renew the focus for new vigour in bilateral relations at the highest level.

Courtesy: The Telegraph, HBL, The New Indian Express, BS, The Hindu, Money Control, Business Today, CNBC TV18, The Print, ET