India and UAE: A Comprehensive Partnership

in 21st Century

Zakir Hussain

Research Fellow

Indian Council of World AffairsSapru House, Barakhamba Road

New Delhi, India

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India and UAE: A Comprehensive Partnership in 21st

Century

Dr. Zakir Hussain1

If bilateral visits are the barometer of growing intimacy between the two

nations, India and the United Arab Emirates perfectly stand fit to this

parameter. In less than six months, four high level visits have been

exchanged between the two countries. The visit of the UAE’s Foreign

Affairs Minister, Abdullah bin Zayed al Nayahan to India on 15-16 May

carries historical significance in many sense. For the first time, UAE has

openly acknowledged the need for working together with India on some

of the pressing common regional issues such as such as stabilizing

Afghanistan, combating maritime piracy as well as stabilizing Somalia,2

the homeland of piracy in the Gulf of Aden, as well as showed concerns

over the religious and sectarian faultlines emerging in the Gulf. Sheikh Al

Nayahan also expressed his satisfaction over the improving India-

Pakistan relations, and hoped to equiv-balance India and Pakistan.

Otherwise, India has always been termed as “friendly” nation while

Pakistan, “brotherly”.

Furthermore, the visit of Sheikh Abdullah provided the much-need

impetus to the growing economic and strategic engagements between

the two countries as he described India as an “ally and cherished

neighbour”, and said that UAE would like to have a “strong presence” in

the Indian market in future.

1 Dr. Zakir Hussain is Research Fellow at Indian Council of World Affairs, Sapru House, Barakhamba Road, New Delhi. He is an economist, having rich experience on almost all bilateral issues between India and the Gulf and the issues of gulf itself. His area of research is Political Economy of India and the Gulf. He can be accessed at: shahabzakir@gmail.com. His mobile no: +91-7838608840.2 UAE Foreign Minister Visits India, http :// defenceforumindia . com / forum / foreign - relations /36494- uae - foreign - minister - visits - india . html

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India and UAE have enjoyed strong bonds of friendship since 3000 BCE.

Culture, religion, polity and economic interactions have played a lead

role in cementing and enhancing their bilateral nexus. However, the

bilateral relations took off particularly after the accession of Sheikh

Zayed bin Sultan al Nahayan as ruler of Abu Dhabi in 1966 and the

formation of UAE Federation subsequently in 1971. Thereafter, the

bilateral engagements between India and the UAE grew at a faster than

with any other country of the region. Both counties signed plethora of

agreements and MoUs, ranging from economy, polity, security, science &

technology, hydrocarbons, agriculture to human resource development,

recreational activities, including culture, sport, to tackling extradition,

crime and preventing inimical uses of the sea and ensuring maritime

security, etc.3

Trade and Commercial Nexus

Trade and commerce has played crucial role in developing the bond of

friendship between the two countries. Since ancient time, UAE has been

India’s trade corridor to the Gulf and beyond. However, major impetus

occurred when Sheikh Zayed bin Sultan al Nahayan assumed the charge

of the UAE and emphasised over outward economic policies. Similarly,

India in the post-1990 period liberalised its economy and trade became

one of the major growth indices. This established a strong synergy

between the two countries. The volume of bilateral trade jumped from

just $170 million annually in 1970s to more than $67 billion in 2010-11,

making UAE India’s largest trading partner, even exceeding China and

the USA. UAE accounts 10 to 14 percent of India’s total trade. Bilateral

trade is expected to surpass $103.6 billion by 2025, according to an

HSBC report.4 The significant of Indo-UAE trade lies in its non-oil

component, enabling India to enjoy favour balance of trade over the last

3 For detailed discussion on Agreements and MoUs signed between India and the UAE see….4 Claire Ferris-Lay, “Banking for Masses”, Arabian Business, 20 October 2011, http :// m . arabianbusiness . com / banking - for - masses -427391. html

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few years. (see Table 1). However, henceforth, when India’s oil import

from UAE grows, India’s trade with UAE will also witness imbalances.5

Table 1

India-UAE Trade, 2002-3/2010-11

(in US$ million)

Year 2002-3

2003-4

2004-5

2005-6

2006-7 2007-8

2008-9 2009-10

2010-11

Export

3327.48

5125.61

7347.88

8591.79

12,021.77

15,636.91

24,477.48

23,970.40

34,349.10

% Growt

h-- 54.04 43.36 16.93 39.92 30.04 56.54 -2.7 43.3

Import

956.99

2059.85

4641.10

4354.08

8655.28

13482.61

23791.25

19499.10

32753.16

% Import

-- 115.24

125.31 -6.18 98.79 55.77 76.46 -18.04 67.97

Total Trade

4,284.47

7,185.46

11,988.98

15,945.87

20,677.05

29,119.52

48,268.72

43,469.50

67,102.26

% Growt

h-- 67.71 66.85 7.98 59.72 40.83 65.76 -9.94 54.37

Trade Balance

2370.49

3065.76

2706.78

4237.71

3366.50

2154.30 686.23

4471.30

1595.94

Source: DGCIS, Kolkata.

Investment Opportunities- Building Long-term Partnership

Investment offers massive scope for establishing stable and strategically

long-term relationships between India and the UAE as trade potentials

between the two has almost reached to its saturation point i.e. $68

billion. Furthermore, on account of certain developments that has taken

place in recent months in New Delhi such as improving economic ties

between India and Pakistan, signing of INSTC (International North South

Transport Corridor) and TAPI (Turkmenistan, Afghanistan, Pakistan and

India) has reduce the chances of growth in trade as these transport

corridors would directly connect these countries to India hitherto doing

business via the UAE. As a result, as these direct transit corridors

5 For instance, bilateral trade with Kuwait amounts to $10 to 12.27 billion, however, India exports only $2.5 billion, rest is imported. Similarly, trade with Saudi Arabia is $25 billion, of which only $5 billion rest India import, i.e. $20 billion. With Qatar, total bilateral trade is around $ 4.6 billion- import $3.7 bn while export is $900 million.

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become operative, UAE significance as a trade corridor linking Gulf, Iran,

Central Asia and part of North Africa will drastically decline.6

Another possible reason of shrinking trade interactions between India

and the UAE is the continued global economic meltdown, which has

drastically affected the US-West economic capability to attract foreign

investments, while on the other hand, the fast emerging economies of the

east, particularly India and China, having strong economic fundamentals,

promises high return to the foreign investments. One more reason of the

UAE investors to focus their investment priorities towards the eastern

economies, particularly India, is “home grown”. The cash-rich Gulf

monarchies are engaged into intense competition amongst themselves,

particularly in select industries such as banking and finance, real estate,

Islamic banking and Islamic finance, stock exchange, etc; consequently,

this leaves little scope to outshine and grow. Already the UAE, which had

relatively suffered more from the economic recession due to greater

exposure to the world economy, is yet to recover fully; its free-port cities

have performed dismally, recoding just only 3.5 percent growth. Hence,

it is not in position to venture into risky business.

The UAE investors, both public and private, have shown keen interest in

India’s sunrise sectors such as real estate, retail sector, downstream,

petrochemicals and fertilizer industry, which promises better and stable

returns. Looking at the investment prospects, UAE’s Foreign Minister

during his media interaction said that “India is not only a very important

ally and a neighbour to the UAE, but it’s a booming economy worldwide.

There is potential of $1 trillion of investment in India in the next five

years. India is looking for half of that amount to come from abroad. We

6 For instance, total trade between India and Pakistan is estimated around $10 billion, with a potential to grow around $15 to $20 billion; however, due to bad relations only $2.5 billion trade is formally taking place, while $7 to $8 billion trade is taking place via UAE, particularly Dubai. This will definitely feed into UAE share of trade which used to go to Pakistan via Dubai.

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would very much like to see a strong UAE presence in that.”7 At this

occasion, both India and the UAE announced to establish a High Level

Joint Task Force “to explore investment opportunities” in both the

countries.

Indeed, UAE has already been India’s 10th largest investor, investing

nearly $1.8 billion, concentrating mainly in five areas: energy (19.1 per

cent), services (9.3 per cent), programming (7.8 per cent), construction

(6.8 per cent), and tourism and hotels (5.6 per cent). EMAAR Group, RAK

Group, DP World, and Nakheel, Estisalat DB Telecom, are some of the

UAE companies active in India. Table 2 presents the trends in UAE

investments in India.8

Table 2__________________________________

(in $ million)

Year Investment from UAE

Total investment

Percentage of UAE

2000-1 1.58 2907.52 0.052001-2 23.56 4221.89 0.562002-3 15.11 3133.85 0.482003-4 16.81 2634.21 0.642004-5 39.27 3758.94 1.042005-6 49.2 5545.94 0.892006-7 259.9 15726.19 1.652007-8 257.84 24580.95 1.052008-9 257.05 27330.82 0.94November 2009

555.65 19379.60 2.87

Source: Ministry of Trade, UAE.

Correspondingly, the Indians have also emerged as one of the important

investors in UAE. They have invested in several areas such as tourism,

catering, retail, food items, service and manufacturing sector. According

to a recent report issued by Dubai’s Ports, Customs and Free Zone

Corporation, India was Dubai’s top trade partner in 2011, constituting

7India an “ally and cherished neighbour”: UAE Foreign Minister,  http :// www . defence . pk / forums / world - affairs /181360- india - ally - cherished - neighbour - uae - foreign - minister . html # ixzz 1 vmnkcZ 92 8 http :// www . moft . gov . ae / images / releasesen /159. pdf

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AED 206 billion or 19 per cent of Dubai’s total foreign trade of AED1.1

trillion last year. The Dubai Chamber of Commerce and Industry has

more than 20,000 Indian companies registered. According to one report

of the Ministry of Foreign Trade, UAE, “The value of Indian investments

in the UAE reached 2.5 billion USD, accounting for 7 per cent of the total

volume of direct foreign investment in 2007 and these investments were

concentrated in manufacturing activities with a total value of $156

million, in the field of construction and contracting with a total value of

$1.5 billion, and $844 million in the rest of the sectors.”9 Major Indian

companies engaged in joint ventures in UAE are Tata, Reliance, Wipro,

NTPC, Larsen & Toubro, Dodsals, and Punj Lloyd, Oberoi, , Hinduja

group, Pioneer Cement.

The growing presence of the Indian business and professional community

in UAE has induced the Indian Trade and Exhibition Centre (ITEC),

Middle East, to publish first-ever official directory. The directory will list

more than 10,000 Indian businessmen. 10 As a part of developing and

mixing up with local business milieu, the Indian Business Leader Forum

(IBLF) at Dubai has undertaken a unique initiative to learn Arabic and

understand the UAE culture with a view to assimilate themselves

locally”.11

UAE- India’s Energy Hope

India is a well know energy-deficient country in the world; it resources 80

percent of its total crude demand from outside and the Gulf meets nearly

60 percent. In this, Iran plays crucial role by supplying 12 percent of the

total. However, under the “Iran Threat Reduction Threat Act (December

9 http :// www . moft . gov . ae / images / releasesen /159. pdf 10 The directory will be released by October 2012. According to Chairman of the ITEC, Mr. Sudesh Aggarwal that the listing of more than 10,000 Indian businessmen in the directory underscore the value of trade and brotherly relations existing for centuries between the two great countries.?

11 Indian Businessmen Vow to learn Arabia in UAE, The Times of India, October 12, 2011. http://timesofindia.indiatimes.com/nri/other-news/Indian-businessmen-in-UAE-vow-to-learn-Arabic/articleshow/10324215.cms

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2011)”, India is under intense pressure from the US to cut or drastically

minimise its energy nexus with Iran; Since 2008-09, nevertheless, India

started diversifying its oil imports, and over the last three years, India

cut nearly 29.5 percent of its oil import from Iran, from 22 MMT in 2008-

09 to 17.5 MMT in 2010-11 and has planned to cut 11.4 percent further,

down to 15.5 MMT for the year 2011-12.

To maintain its growth momentum, India is looking for additional sources

to compensate the Iranian share. This raises the energy significance of

the UAE, which is sitting on 8.8 percent of the global oil reserves with a

shelf life of 100 years. During this visit, the UAE Foreign Minister,

Sheikh Abdullah, assured India that UAE would be a “trusted and reliable

energy partner”. While visiting to UAE, in April 2012, India’s Foreign

Minister S.M. Krishna said: “In United Arab Emirates we have a

dependable supplier of oil. In 2010, we imported 12 million tonnes and in

2011, we increased it to 14 million tonnes. So this would be the

indication at the rate at which our import from UAE is going up.” Now,

UAE has emerged as India’s fourth-largest oil supplier, after Saudi

Arabia, Iraq and Iran. Mr Krishna added that it was decided to set up a

high-level joint task force on investment which will also look into

securing more oil supplies from UAE.12

UAE has also been attracted towards India’s growing petrochemical,

downstream and fertilizer industries. India’s domestic petrochemical

industry is estimated at around $40 billion and is expected to grow at 12–

15 per cent over the next five years.13 UAE’s interest in the matter offers

a huge opportunity, both in terms of finance and getting stable and

secured oil supply at reasonable rates. According to McKinsey, “By 2020,

India has the potential to grow in the speciality chemical industry (dyes,

pigments, pesticides, fertilizer, colourings) from $22 billion to between

12 http :// www . mofa . gov . ae / mofa _ english / portal / b 2 ed 8 c 93-96 f 6-4751-88 b 1-135944 cd 2923. aspx 13 “Petrochemical Industry to Grow at 12-15% a year: Assocham”, http :// www . thehindubusinessline . com / industry - and - economy / article 2885625. ece

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$80–100 billion ... the speciality chemical industry could lead to $20–25

billion investments and can create 7–8 lakh additional jobs.14

India’s fertilizer sector also offers massive scope for cooperation between

the two countries. In 2010-11, India imported around 4.069 million

tonnes of potassic fertilizers, which is its total requirement of this

product. In the case of phosphorus-based fertilizers, during the same

year, India imported 90 per cent of its total demand, around 4.2 million

tonnes.15

India’s downstream industry is one of the largest in Asia. Globally,

between 1999 and 2009, its share in refining capacity grew from 2.7

percent to 3.9 percent. Currently, India has a surplus petroleum

production; its 18 refineries, both public and private, are producing

approximately 184 MMT, while domestic consumption is 130 MMT; by

2013, total production is planned to reach 238.5 MMT. Foreign markets,

especially the East Asian markets, provide a big margin of returns on

investment in this sector. UAE’s interest in India’s downstream sector at

this juncture is a welcome opportunity as both India’s private companies

and UAE’s oil majors can engage and benefit by competing with China,

Singaporean and Middle Eastern refineries.

Increasing cooperation in the energy sector with the UAE will also allow

India to establish a long-term strategic energy partnership. UAE has

approximately 8.8 per cent deposits of the global recoverable oil, and at

the current reserve-to-production (R/P) ratio, its shelf life is estimated at

around 100 years.16

14 “India’s specialty chemical business can grow to $ 80-100 billion by 2020: McKinsey”, The Economic

Times, 8 February 2012, http :// articles . economictimes . indiatimes . com /2012-02-08/ news /31037798_1_ specialty - chemicals - chemicals - industry - mckinsey 15 Economic Survey of India, 2011-12.16 It is estimated that at the end of 2009, Saudi Arabia controlled around 22.4 per cent of the world’s oil deposits; Iraq accounted for 9.8 per cent; Kuwait for nearly 8.6 per cent; and the UAE for 8.3 per cent. In terms of the Arab world, which has 57.8 per cent deposits of the global oil, UAE has 14.4 per cent deposits.

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Migration and Tourism – Building the Bridges

Diaspora and tourism have worked as a two way flow to cement as well

as revive the millennia-old ties between India and UAE. The deep

network established by the diaspora community opened up the scope for

‘people-to- people’ interactions. This promoted tourism in both the

countries. Indian business and working community carried the Indian

ethos and filled the ‘information gap’ about India; this generated strong

urge among the UAE citizens to visit and explore the “Incredible India”. .

At present, Indians are the largest expatriate community, approximately

1.75 million, around 40 percent of total Arab population. Among them, 15

to 20 per cent are professionally qualified, 20 per cent are non-

professionals (clerical staff, shop assistants, salesmen, accountants), and

the remainder (65 per cent) are blue-collar workers.17

However, managing such a huge overseas community, where their own

population has become a minority, has not been an easy task for the

emirates of UAE. Reports of harassment, delayed payment, long working

hours, below-standard residential amenities and lack of health and

hygiene, particularly of female and blue-collar works, are frequently

reported. Realising the gravity of the problem, in 2006, both the

countries signed MoU on Manpower Souring, which again revised in

September 2011, during the visit of UAE Labour Minister Saqr Ghobash

to India. Over the period, the authorities of both the countries undertook

several measures to reduce the avoidable hardships. Among them are:

tightening the recruitment agencies, imparting pre-migration orientation

programme, forming India Mission House with a 24- hours helpline and

establishing the Indian Workers resource Centre (IWRC) at Dubai,

providing a 24-hours helpline; formation of Indian Community Welfare

17 India UAE Relation, http :// moia . gov . in / pdf / UAE . pdf .11

Fund (ICWA) to provide to provide food, shelter, medicines, passage

expenses, etc. to destitute workers/households.18 19

Looking at the growing volume of traffic, the two countries’ aviation

authorities signed a Bilateral Civil Aviation Agreement in 1989, which

again amended in 2004, providing multiple designations of carriers,

following Abu Dhabi’s launch of Etihad Airlines.20 At present, there are

approximately 450 flights per week between India and UAE. This has

helped not only the workers’ community to easily transit but facilitated

the visits of the business community and tourists as well. Underlining the

significance of the Indian travellers, in a press release on 25 April 2012,

Dubai International reported that “India has continued to retain its

position as the top destination country in terms of passenger traffic for

Dubai International ... The number of passengers travelling between

India and Dubai increased by 7 per cent in the first quarter of 2012,

reaching 1,824,307, compared to 1,704,180 during the same period in

2011 ... A total of seven airlines connect Dubai to 17 destinations across

India.”21 The United Nations’ World Tourism Organization forecasts that

more than 50 million Indians will undertake outbound travel by 2020.22 In

2001, UAE received 246,335 Indian tourists, which increased to 336,046

in 2002, 357,941 in 2003 and 356,446 in 2004.23

18 India-UAE Relations, http :// mea . gov . in / mystart . php ? id =50044537

19 During his visit to the UAE in April 2012, India’s Foreign Minister SM Krishna, stressed the need for

understanding the local cultures and traditions so the Indian workers could easily be adaptable. He “asked Indian embassies in Gulf nations to actively engage local governments to better the living and working conditions of millions of Indians in the region, who are the largest contributors of remittances back home” “SM Krishna asks embassies in gulf to look after Indian expats”, Economic Times, 15 April 2012,http :// articles . economictimes . indiatimes . com /2012-04-15/ news /31345303_1_ indian - expatriates - gulf - region - embassies20 http :// moia . gov . in / pdf / UAE . pdf 21 http :// www . dubaiairport . com / en / media - centre / Pages / press - releases . aspx ? id =83 22 Ibid…n. 16. According to Dubai Tourism and Commerce Marketing, more than 700,000 Indian visitors stayed at Dubai hotels in 2011.23 “Indian Tourism Statistics, 2010. Government of India, Ministry of Tourism, Market Research Division”, http :// tourism . gov . in / writereaddata / CMSPagePicture / file / Primary %20 Content / MR / pub - OR - statistics / 2010 Statistics . pdf

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Similarly, India also attracts sizeable numbers of tourists from UAE. In

2007 around 32,750 tourists arrived in India, which increased to 63,502

in 2008. However, in the last couple of years, their number has dipped,

from 47,234 in 2009 to 45,482 in 2010.24 Although the share of UAE

tourists in total arrival of tourists in India, which increased from 1.9

million in 1991 to 12.99 million in 2010, is less than one per cent, their

high per capita income makes them luxury-oriented tourists. On an

average a UAE tourist spends nearly 150,000 Indian rupees. Medical

tourism is a strong segment of UAE tourists visiting India.

Defence and Strategic Cooperation – Need of the Time

India’s growing naval stature in the Indian Ocean on one hand and the

growing menace at sea, including maritime security, piracy, inimical uses

of sea such as smuggling, gun running, trafficking and dugs, have

brought the two countries to cooperate and initiate serious defence and

security dialogues. In June 2003, India and the UAE signed an MoU on

defence cooperation, followed by setting up a Joint Defence Cooperation

Committee (JDCC). Cooperation in defence was supplemented with a

corresponding annual “strategic” dialogue between the two countries.

Potential areas of cooperation in defence fields underlined are: providing

training to UAE defence personnel, production and development of

defence equipment, conducting joint exercises, especially naval and coast

guard, sharing information on strategy and doctrines and regular

exchange of programmes related to security and defence, technical

cooperation in Intermediate Jet trainers, cooperation in military medical

services and jointly combating pollution caused by military at sea as well

as cooperation in defence production industries, etc. At the first JDCC

meeting, the two sides agreed to support defence exhibitions in each

other’s country by deputing its platforms and personnel.25

24 Ibid., n.18.25 http :// www . indembassyuae . org / induae _ bilateral . phtml

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Besides naval engagements, India and UAE have also conducted Joint Air

Force exercises at the Al-Dhafra base in Abu Dhabi. Since 1995, India

has been regularly participating in all international defence exhibitions

(IDEX) organized by the General Exhibitions Corporation of UAE. Some

companies such as Bharat Earth Movers Ltd. and Bharat Dynamics Ltd.

participate in these. The participants have supplied items such as

uniform, boots, etc. to the local Police Department.

During Mr Krishna’s visit, Sheikh Abdullah acknowledged that for

resolving piracy in the Gulf of Aden both countries were working

together “very closely”.

Looking for Enhanced Engagement

There are several potential areas where both countries can engage and

enhance and benefit from their mutual cooperation. Some potential areas

are as follow:

● Establishing Synergy in Hydrocarbons - Indo-GCC Gas Pipeline

Looking at the R/P ratio, UAE’s oil deposits are inexhaustible for the

coming 100 years. This opens a window of opportunity for UAE to offer

India acreages to share and explore its oil-rich regions. Indian companies

such as OVL, IOL and Reliance Petrochemicals have the capacity to

assist, train and finance oil projects in Abu Dhabi, where 90 per cent of

UAE’s hydrocarbons are deposited.

One significant area where India and UAE can engage is building

undersea pipelines. Recently, India and Oman have signed 40-year gas

supply contract of this nature: the gas will be supplied through undersea

pipeline; the cost is estimated around $4.5 billion.26 India and UAE can

also think of extending the Dolphin Project up to the Indian border or the

26 India-Oman Gas Pipeline Plan, PFI Issue 20, http://www.pfie.com/oman-india-pipeline-plan/379319.article 14

Indo-Omani pipeline may be converted into Indo-GCC Gas Pipeline.27

Qatar, which is India’s LNG supplier, may also join the group; Iran may

also join the Indo-GCC Pipeline later on.

India’s domestic pipelines which connects the western coast to the

eastern coast, can convert the Indo-GCC Gas Pipeline into a vehicle to

target the East Asian gas market making India’s eastern coast as ‘hub’.

This will help reduce not only the marine pollution, sea line congestion at

the Strait of Hormuz but also open up Asian gas market to the Gulf

countries, which find touch to sell to the western market, which is also

ready facing the saturation and tough competition with the Russian gas

companies.28 Indo-GCC Gas Pipeline will engage multiple partners; hence

give India a better leverage to manipulate the energy politics.

● Nuclear Power Generation

UAE is among the first nations in the Gulf region to successfully meet all

the procedures for owning nuclear capability for civilian purposes and

has established Emirates Nuclear Energy Cooperation (ENEC) in 2009 to

deliver safe, clean and efficient nuclear energy to the country. In

addition, Abu Dhabi awarded contracts worth $20 billion to South Korean

firms for building the first nuclear energy plant in the country, which is

anticipated to be completed in 2017. Nuclear power will account for 23–

25 per cent of Abu Dhabi’s electricity supply in 2020.29 India is well

known for its nuclear capability as well as for being a responsible nation

in nuclear-related matters. This opens scope for the two countries to

develop a trustworthy relation in this field as well. Although South

Korea’s KEPCO has bagged all the contracts to run the nuclear facilities

in UAE, India may be a reliable partner, particularly offering its rich

experience and manpower services. Another area where India and UAE

27 ? The idea of building an Indo-GCC Gas Pipeline was first suggested by this author in his doctoral thesis. Which is on India-GCC Political Economic Relations in the Post-1990 Period,28 For detailed discussion see this author’s unpublished thesis.29 Ayob Kazin, “UAE’s Future Energy Plan”, Pacific Controls, 17 January 2012, http :// pacificcontrols . net / news - media / uae - future - energy - plans . html

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can work in future is converting silica into thorium. Both countries have

abundant silica resources and India’s third-generation nuclear plan is

based on thorium; the vast silica resources on Kerala beaches will be of

immense help.

● Non-conventional energy sources

UAE has launched a 12 billion dirham Mohammad bin Rashid al

Maktoum Solar Park, which will eventually produce 1000 megawatts of

power. According to the Dubai Integrated Energy Strategy 2030, the

government is looking to diversify the source of energy, defining the

target for renewable energy to supply 1 per cent of Dubai’s energy by

2020 and 5 per cent by 2030:  most of it will be solar.30 One of the largest

solar missions in Abu Dhabi is the MASDAR city project. The UAE

government has also established an Ocean Thermal Energy Conversion

(OTEC) unit. Silica is a good source of geo-thermal energy. In all these

fields, India and UAE can share their expertise and resources. Indian

companies such as LANCO and Indo-Solar are doing business and talks

with India’s TERI (Energy Research Institute) are also going on.

However, the two countries need to have a better and more coordinated

pro-active policy in non-conventional sources of energy.

● Islamic Banking and Islamic Finance

India’s vast Muslim population provides a huge market for Islamic

banking and Islamic finance, which operates on “interest-free” (Riba-

free) banking principles. Besides this, India is one of the largest non-

Arab Arabic knowing/speaking countries in the world. This fact will

overcome the language barrier as well. Otherwise, the English-speaking

population has the requisite ability to carry forward business activities,

both in India and UAE. Arabic-speaking India scholars can assist the

emirates to handle their stock exchange-related issues as well.

30 Zaher Bitar, “Shaikh Mohammad launches Dh12b solar power project”, Gulf News, 9 January 2012,

http :// gulfnews . com / business / investment / shaikh - mohammad - launches - dh 12 b - solar - power - project -1.963515 16

● Health and Pharmaceutical

India has acquired an acclaimed status both for providing low-cost world

class medical services as well as low-cost and reliable generic medicines.

Over the past few decades, its pharmaceutical industry has grown to be

worth nearly $24 billion and has now acquired a status of reliability and

confidence, particularly in low-cost life-saving and AIDS medicines. India

can establish a joint medical association and target the Gulf, North

African and the Central Asian regions easily and effectively.

Telemedicine, medical tourism and online treatment are a convenient

mode, which reduces time, expenditure plus provides immediate relief to

the patients. The Indian medical community, including care-workers, has

been globally known for its efficiency and dedication.

● Research and Higher education

India within its scarce resources and in a limited time span has proved its

mettle in education and research. UAE can benefit from India’s

experience and build a strong R&D foundation and nurture an indigenous

“knowledge community”, which will work as a bridge between the two

nations.

● India’s Balancing Act in the Region – Building Trust among Arabs and Persians

Since India has deep historical, political, economic and cultural

relationships with almost all the Trucial and Levant states, plus Saudi

Arabia and Iran, it can play a key role in resolving and minimizing the

trust deficit among all these nations. Looking at the multiplicity of India’s

own society, the Indian model can provide a suitable solution or model to

these countries passing through a high phase of transformation.

Coexistence, secularism and liberal democratic setup may be helpful in

reducing as well as minimizing the acrimony arising in the form of Shia-

Sunni divide, Arabs versus Persians and inter-tribal conflicts. India is the

17

second-largest home of Muslims in the world, with the second-largest

Shia population after Iran. Its system has well absorbed as well as

handled not only the different religious groups but also ethnicities, races

and regional diversities.

● Defence and Strategy - Contingency Planning

Since 2003, although both countries have started their engagements in

defence and on a limited scale in strategic fields by holding an annual

strategic dialogue, looking at the growing instability in the region in

general and on the seas in particular, the two countries need to expand

their engagements more widely and thoroughly. The growing menace of

piracy, alliance of pirates with terrorism, termed as “terro-piracy”,

increasing inimical uses of the seas in the region on one hand and UAE’s

vulnerability and India’s growing naval capability on the other, make

close naval-related relationship between the two countries a pragmatic

affair. In recent years, Somalia has become notorious not only for piracy

but also for allying terror groups such as al-Shabab with Yemen-based

AQAP (al-Qaeda of Arabian Peninsula). About 25,000 ships transit

annually through the Gulf of Aden. Looking at the threat to the narrow

Strait of Hormuz, through which one-fifth of the world oil passes daily,

India and UAE along with other Gulf littoral countries such as Bahrain,

Kuwait and Oman need to move at a higher level of defence deals.

Another strategic area where India, which enjoys close relations with

Iran as well, can play a key role as mediator to help UAE is to resolve its

dispute with Iran on the three islands, Abu Musa, Greater Tunb and the

Lesser Tunb, which are under Iran’s occupation since 1971.

Other areas where India and UAE can cooperate and work together are:

climate, managing marine pollution, ensuring better transit of oil though

the Strait of Hormuz, as well developing joint mechanisms in tackling

piracy, water desalination, developing crop seeds suitable to arid and hot

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regions, and cooperation in aquaculture and fisheries, etc. India’s

peninsular shape makes it a natural maritime power in the Indian Ocean.

The Ignored Horizons

There are also some grey areas where the two countries need to work

and improve their existing relationships. Foremost is the labour issue.

India is the largest supplier of human resources to the UAE; the Indian

citizens in UAE play a crucial role in developing and sustaining UAE’s

growth and development. However, the interest of the expatriate

community is not effectively protected; neither are they adequately

covered with welfare programmes. Kharjis (expatriate workers) are

differently treated in terms of wage, working hours, and residential and

medical facilities. The women migrant workers have their own specific

problems. Although the two countries have signed a manpower

agreement in 2006 and revised it in 2011, there is slow progress in

implementing their provisions. Some issues like minimum wage,

provision of pension, health insurance and developing some mechanism

to safeguard loss against currency fluctuation to the expatriate workers,

should also be taken under consideration.

Issues like black money, extradition of criminals residing in various parts

of UAE, balancing bilateral relations between India and Pakistan also

need serious policy consideration by UAE authorities. This will not only

add momentum to India-UAE bilateral relations but also help raise the

image of UAE, in terms of soft power, among common Indians.

Prescient Thoughts

The changing strategic configuration in the Gulf has created a new

permutation and combination both in terms of strategic and economic

interests. Europe is facing crisis and the US economy is in doldrums,

while the Indian economy shows promise. The reasons for India’s positive

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outlook might be the sustenance of the services industry and less

reliance on exports. Importantly, the new region of the Indian Ocean is

gaining international attention. In the 6th policy document which was

released by the US in January 2012, it was stated that the Indian Ocean

as a region is gaining critical mass both in terms of economic sustenance

and increasing interdependence. Also, the revival of the IOR-ARC

through India has propelled new developmental objectives and better

integration of production and manufacturing networks, showing new

alternatives to the globalizing world. IONS (Indian Ocean Naval

Symposium), which was seen as an informal gathering, is now getting

better attention to the extent that the West Pacific Naval Symposium and

IONS are stated to be integrated together for better naval and maritime

monitoring. This helps India’s purpose, strategically and economically as

well.

The countries of the Gulf region have been eying India for governance

and structural reforms and also to bring about incremental change in

governance structures. In this light the visits of the high-level Indian

delegations to Oman, Qatar and Bahrain, which included military

delegations supplemented with return visits from these countries, show

the increasing relevance of the region for India. Chinese ships that have

been deployed in the Gulf of Aden have been visiting these countries and

docking at their ports both for entertainment and refuelling. This

provides India the required strategic angle to engage with these

countries. In this context, UAE emerges as one country which is seen as

an important hub: the historical and cultural linkages provide the

necessary foundation for a closer strategic relationship between the two

countries.

India’s relationships with the Gulf region in general and the UAE in

particular has although been more than 3000 millennium old; the

connection between security and stability between the two countries has

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been realised for the first time in 1981 when Mrs. Indira Gandhi visited

and met the UAE President Shaikh Zayed. Both the leaders explicitly

stated that “peace in one region was important for peace in the other

region”.31 Sheikh Zayed said “at a regional level, we also look forward to

an increased involvement by India in issues affecting the Gulf and

neighbouring countries” and that “it is in both of our interests to work

together more and more closely.32 In 2005, India propounded the “look

west policy” and acknowledged Gulf as its extended neighbourhood and

expressed to share the fruits of India’s growth and development with the

Gulf countries, including the UAE.

Over the period, India has developed some significant stakes in the

region; its more than 6 million diaspora community with 29 percent (1.75

million) are working and living in the UAE alone; they are religiously

remitting more than $35 billion annually to India; India carries out

approximately $120 to $130 billion trade with the region with UAE as its

largest trading partner; and moreover, India resources 60 percent oil

from the region in general and more than 10 percent from the UAE in

particular.

Looking at the transforming security scenario in the Gulf of Aden,

particularly the growing and expanding menace of piracy and threat to

the safety and security of the merchant shipping on one hand and India’s

growing naval stature in the Indian Ocean on the other, brought both the

countries to seriously engage into security and strategic dialogues.

31 Gulshan Luthra Peace in the Indian Subcontinent and Strategic Gulf Interlinked: India and UAE Exemplify Friendship, June 27, 2007, http://www.indiastrategic.in/topstories19.htm32 Ibid., n.6.

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