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India UAE Partnership


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India UAE Partnership

  1. 1. India and UAE: A Comprehensive Partnership in 21st Century Zakir Hussain Research Fellow Indian Council of World Affairs Sapru House, Barakhamba Road New Delhi, India 1
  2. 2. India and UAE: A Comprehensive Partnership in 21st Century 2
  3. 3. Dr. Zakir Hussain1If bilateral visits are the barometer of growing intimacy between the two nations, Indiaand the United Arab Emirates perfectly stand fit to this parameter. In less than sixmonths, four high level visits have been exchanged between the two countries. Thevisit of the UAE’s Foreign Affairs Minister, Abdullah bin Zayed al Nayahan to India on15-16 May carries historical significance in many sense. For the first time, UAE hasopenly acknowledged the need for working together with India on some of thepressing common regional issues such as such as stabilizing Afghanistan, combatingmaritime piracy as well as stabilizing Somalia,2 the homeland of piracy in the Gulf ofAden, as well as showed concerns over the religious and sectarian faultlines emergingin the Gulf. Sheikh Al Nayahan also expressed his satisfaction over the improvingIndia-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 thegrowing economic and strategic engagements between the two countries as hedescribed India as an “ally and cherished neighbour”, and said that UAE would like tohave a “strong presence” in the Indian market in future.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 andenhancing their bilateral nexus. However, the bilateral relations took off particularlyafter the accession of Sheikh Zayed bin Sultan al Nahayan as ruler of Abu Dhabi in1966 and the formation of UAE Federation subsequently in 1971. Thereafter, thebilateral engagements between India and the UAE grew at a faster than with any othercountry of the region. Both counties signed plethora of agreements and MoUs, rangingfrom economy, polity, security, science & technology, hydrocarbons, agriculture to1 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 Gulfand the issues of gulf itself. His area of research is Political Economy of India and the Gulf. He can be accessedat: His mobile no: +91-7838608840.2 UAE Foreign Minister Visits India, 3
  4. 4. 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 $103.6 billion by 2025, according to an HSBC report.4 The significant of Indo-UAE trade lies in its non-oil component, enabling India to enjoy favour balance of trade over the last few years. (see Table 1). However, henceforth, when India’s oil import from UAE grows, India’s trade with UAE will also witness imbalances.5 Table 1 India-UAE Trade, 2002-3/2010-11 (in US$ million)Year 2002-3 2003-4 2004-5 2005-6 2006-7 2007-8 2008-9 2009-10 2010-11Export 3327.48 5125.61 7347.88 8591.79 12,021.77 15,636.91 24,477.48 23,970.40 34,349.10 % -- 54.04 43.36 16.93 39.92 30.04 56.54 -2.7 43.3 GrowthImport 956.99 2059.85 4641.10 4354.08 8655.28 13482.61 23791.25 19499.10 32753.16 % -- 115.24 125.31 -6.18 98.79 55.77 76.46 -18.04 67.97 ImportTotal 11,988.9 43,469.5 4,284.47 7,185.46 15,945.87 20,677.05 29,119.52 48,268.72 67,102.26Trade 8 0 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:// 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. 4
  5. 5. % -- 67.71 66.85 7.98 59.72 40.83 65.76 -9.94 54.37 GrowthTrade 2370.49 3065.76 2706.78 4237.71 3366.50 2154.30 686.23 4471.30 1595.94Balance 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 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 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. 5
  6. 6. exposure to the world economy, is yet to recover fully; its free-port cities haveperformed dismally, recoding just only 3.5 percent growth. Hence, it is not in positionto venture into risky business.The UAE investors, both public and private, have shown keen interest in India’ssunrise sectors such as real estate, retail sector, downstream, petrochemicals andfertilizer industry, which promises better and stable returns. Looking at theinvestment 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 boomingeconomy worldwide. There is potential of $1 trillion of investment in India in the nextfive years. India is looking for half of that amount to come from abroad. We wouldvery much like to see a strong UAE presence in that.”7 At this occasion, both India andthe UAE announced to establish a High Level Joint Task Force “to explore investmentopportunities” 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 (5.6per 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 UAEinvestments in India.8 Table 2 __________________________________ (in $ million) Investment from Year Total investment Percentage of UAE UAE 2000-1 1.58 2907.52 0.05 2001-2 23.56 4221.89 0.56 2002-3 15.11 3133.85 0.48 2003-4 16.81 2634.21 0.64 2004-5 39.27 3758.94 1.04 2005-6 49.2 5545.94 0.897 India an “ally and cherished neighbour”: UAE Foreign Minister, 6
  7. 7. 2006-7 259.9 15726.19 1.65 2007-8 257.84 24580.95 1.05 2008-9 257.05 27330.82 0.94 November 555.65 19379.60 2.87 2009 Source: Ministry of Trade, UAE.Correspondingly, the Indians have also emerged as one of the important investors inUAE. 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’sPorts, Customs and Free Zone Corporation, India was Dubai’s top trade partner in2011, constituting AED 206 billion or 19 per cent of Dubai’s total foreign trade of AED1.1trillion last year. The Dubai Chamber of Commerce and Industry has more than20,000 Indian companies registered. According to one report of the Ministry ofForeign Trade, UAE, “The value of Indian investments in the UAE reached 2.5 billionUSD, accounting for 7 per cent of the total volume of direct foreign investment in 2007and these investments were concentrated in manufacturing activities with a totalvalue 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 companiesengaged 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 hasinduced 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. 10As a part of developing and mixing up with local business milieu, the Indian BusinessLeader Forum (IBLF) at Dubai has undertaken a unique initiative to learn Arabic andunderstand the UAE culture with a view to assimilate themselves locally”.11UAE- India’s Energy Hope9 The directory will be released by October 2012. According to Chairman of the ITEC, Mr. Sudesh Aggarwalthat the listing of more than 10,000 Indian businessmen in the directory underscore the value of trade andbrotherly relations existing for centuries between the two great countries.b11 Indian Businessmen Vow to learn Arabia in UAE, The Times of India, October 12, 2011. 7
  8. 8. India is a well know energy-deficient country in the world; it resources 80 percent ofits total crude demand from outside and the Gulf meets nearly 60 percent. In this, Iranplays crucial role by supplying 12 percent of the total. However, under the “Iran ThreatReduction Threat Act (December 2011)”, India is under intense pressure from the US tocut 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 nearly29.5 percent of its oil import from Iran, from 22 MMT in 2008-09 to 17.5 MMT in2010-11 and has planned to cut 11.4 percent further, down to 15.5 MMT for the year2011-12.To maintain its growth momentum, India is looking for additional sources tocompensate the Iranian share. This raises the energy significance of the UAE, which issitting on 8.8 percent of the global oil reserves with a shelf life of 100 years. During thisvisit, 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’sForeign Minister S.M. Krishna said: “In United Arab Emirates we have a dependablesupplier of oil. In 2010, we imported 12 million tonnes and in 2011, we increased it to 14million tonnes. So this would be the indication at the rate at which our import fromUAE is going up.” Now, UAE has emerged as India’s fourth-largest oil supplier, afterSaudi 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 oilsupplies from UAE.12UAE has also been attracted towards India’s growing petrochemical, downstream andfertilizer 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’sinterest in the matter offers a huge opportunity, both in terms of finance and gettingstable 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,12 “Petrochemical Industry to Grow at 12-15% a year: Assocham”, 8
  9. 9. pesticides, fertilizer, colourings) from $22 billion to between $80–100 billion ... thespeciality chemical industry could lead to $20–25 billion investments and can create 7–8 lakh additional jobs.14India’s fertilizer sector also offers massive scope for cooperation between the twocountries. In 2010-11, India imported around 4.069 million tonnes of potassicfertilizers, 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.15India’s downstream industry is one of the largest in Asia. Globally, between 1999 and2009, 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, areproducing approximately 184 MMT, while domestic consumption is 130 MMT; by 2013,total production is planned to reach 238.5 MMT. Foreign markets, especially the EastAsian markets, provide a big margin of returns on investment in this sector. UAE’sinterest in India’s downstream sector at this juncture is a welcome opportunity as bothIndia’s private companies and UAE’s oil majors can engage and benefit by competingwith China, Singaporean and Middle Eastern refineries.Increasing cooperation in the energy sector with the UAE will also allow India toestablish a long-term strategic energy partnership. UAE has approximately 8.8 percent 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.1614 “India’s specialty chemical business can grow to $ 80-100 billion by 2020: McKinsey”, The EconomicTimes, 8 February 2012, 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 oildeposits; Iraq accounted for 9.8 per cent; Kuwait for nearly 8.6 per cent; and the UAE for 8.3 per cent. In termsof the Arab world, which has 57.8 per cent deposits of the global oil, UAE has 14.4 per cent deposits. 9
  10. 10. Migration and Tourism – Building the BridgesDiaspora and tourism have worked as a two way flow to cement as well as revive themillennia-old ties between India and UAE. The deep network established by thediaspora community opened up the scope for ‘people-to- people’ interactions. Thispromoted tourism in both the countries. Indian business and working communitycarried the Indian ethos and filled the ‘information gap’ about India; this generatedstrong 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 areprofessionally qualified, 20 per cent are non-professionals (clerical staff, shopassistants, salesmen, accountants), and the remainder (65 per cent) are blue-collarworkers.17However, managing such a huge overseas community, where their own population hasbecome a minority, has not been an easy task for the emirates of UAE. Reports ofharassment, delayed payment, long working hours, below-standard residentialamenities 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 thecountries 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, theauthorities of both the countries undertook several measures to reduce the avoidablehardships. Among them are: tightening the recruitment agencies, imparting pre-migration orientation programme, forming India Mission House with a 24- hourshelpline and establishing the Indian Workers resource Centre (IWRC) at Dubai,providing a 24-hours helpline; formation of Indian Community Welfare Fund (ICWA)to provide to provide food, shelter, medicines, passage expenses, etc. to destituteworkers/households.18 1917 India UAE Relation, India-UAE Relations, 10
  11. 11. Looking at the growing volume of traffic, the two countries’ aviation authorities signeda Bilateral Civil Aviation Agreement in 1989, which again amended in 2004, providingmultiple designations of carriers, following Abu Dhabi’s launch of Etihad Airlines.20 Atpresent, there are approximately 450 flights per week between India and UAE. Thishas helped not only the workers’ community to easily transit but facilitated the visitsof the business community and tourists as well. Underlining the significance of theIndian 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 ofpassenger traffic for Dubai International ... The number of passengers travellingbetween India and Dubai increased by 7 per cent in the first quarter of 2012, reaching1,824,307, compared to 1,704,180 during the same period in 2011 ... A total of sevenairlines connect Dubai to 17 destinations across India.”21 The United Nations’ WorldTourism Organization forecasts that more than 50 million Indians will undertakeoutbound travel by 2020.22 In 2001, UAE received 246,335 Indian tourists, whichincreased to 336,046 in 2002, 357,941 in 2003 and 356,446 in 2004.23Similarly, India also attracts sizeable numbers of tourists from UAE. In 2007 around32,750 tourists arrived in India, which increased to 63,502 in 2008. However, in the lastcouple of years, their number has dipped, from 47,234 in 2009 to 45,482 in 2010.24Although the share of UAE tourists in total arrival of tourists in India, which increasedfrom 1.9 million in 1991 to 12.99 million in 2010, is less than one per cent, their high percapita income makes them luxury-oriented tourists. On an average a UAE tourist19 During his visit to the UAE in April 2012, India’s Foreign Minister SM Krishna, stressed the need forunderstanding the local cultures and traditions so the Indian workers could easily be adaptable. He “askedIndian embassies in Gulf nations to actively engage local governments to better the living and workingconditions of millions of Indians in the region, who are the largest contributors of remittances back home” “SMKrishna asks embassies in gulf to look after Indian expats”, Economic Times, 15 April 2012, Ibid…n. 16. According to Dubai Tourism and Commerce Marketing, more than 700,000 Indian visitorsstayed at Dubai hotels in 2011.23 “Indian Tourism Statistics, 2010. Government of India, Ministry of Tourism, Market Research Division”, Ibid., n.18. 11
  12. 12. spends nearly 150,000 Indian rupees. Medical tourism is a strong segment of UAEtourists visiting India. Defence and Strategic Cooperation – Need of the TimeIndia’s growing naval stature in the Indian Ocean on one hand and the growingmenace at sea, including maritime security, piracy, inimical uses of sea such assmuggling, gun running, trafficking and dugs, have brought the two countries tocooperate and initiate serious defence and security dialogues. In June 2003, India andthe UAE signed an MoU on defence cooperation, followed by setting up a JointDefence Cooperation Committee (JDCC). Cooperation in defence was supplementedwith a corresponding annual “strategic” dialogue between the two countries. Potentialareas of cooperation in defence fields underlined are: providing training to UAEdefence personnel, production and development of defence equipment, conductingjoint exercises, especially naval and coast guard, sharing information on strategy anddoctrines and regular exchange of programmes related to security and defence,technical cooperation in Intermediate Jet trainers, cooperation in military medicalservices and jointly combating pollution caused by military at sea as well ascooperation in defence production industries, etc. At the first JDCC meeting, the twosides agreed to support defence exhibitions in each other’s country by deputing itsplatforms and personnel.25Besides naval engagements, India and UAE have also conducted Joint Air Forceexercises at the Al-Dhafra base in Abu Dhabi. Since 1995, India has been regularlyparticipating in all international defence exhibitions (IDEX) organized by the GeneralExhibitions Corporation of UAE. Some companies such as Bharat Earth Movers Ltd.and Bharat Dynamics Ltd. participate in these. The participants have supplied itemssuch as uniform, boots, etc. to the local Police Department.During Mr Krishna’s visit, Sheikh Abdullah acknowledged that for resolving piracy inthe Gulf of Aden both countries were working together “very closely”.25 12
  13. 13. Looking for Enhanced EngagementThere are several potential areas where both countries can engage and enhance andbenefit from their mutual cooperation. Some potential areas are as follow: ● Establishing Synergy in Hydrocarbons - Indo-GCC Gas PipelineLooking 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 andexplore its oil-rich regions. Indian companies such as OVL, IOL and ReliancePetrochemicals 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: thegas will be supplied through undersea pipeline; the cost is estimated around $4.5billion.26 India and UAE can also think of extending the Dolphin Project up to theIndian border or the Indo-Omani pipeline may be converted into Indo-GCC GasPipeline.27 Qatar, which is India’s LNG supplier, may also join the group; Iran may alsojoin the Indo-GCC Pipeline later on.India’s domestic pipelines which connects the western coast to the eastern coast, canconvert the Indo-GCC Gas Pipeline into a vehicle to target the East Asian gas marketmaking India’s eastern coast as ‘hub’. This will help reduce not only the marinepollution, sea line congestion at the Strait of Hormuz but also open up Asian gasmarket to the Gulf countries, which find touch to sell to the western market, which isalso ready facing the saturation and tough competition with the Russian gascompanies.28 Indo-GCC Gas Pipeline will engage multiple partners; hence give India abetter leverage to manipulate the energy politics. ● Nuclear Power Generation26 India-Oman Gas Pipeline Plan, PFI Issue 20, 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. 13
  14. 14. UAE is among the first nations in the Gulf region to successfully meet all theprocedures for owning nuclear capability for civilian purposes and has establishedEmirates Nuclear Energy Cooperation (ENEC) in 2009 to deliver safe, clean andefficient nuclear energy to the country. In addition, Abu Dhabi awarded contractsworth $20 billion to South Korean firms for building the first nuclear energy plant inthe country, which is anticipated to be completed in 2017. Nuclear power will accountfor 23–25 per cent of Abu Dhabi’s electricity supply in 2020. 29 India is well known forits nuclear capability as well as for being a responsible nation in nuclear-relatedmatters. This opens scope for the two countries to develop a trustworthy relation inthis field as well. Although South Korea’s KEPCO has bagged all the contracts to runthe nuclear facilities in UAE, India may be a reliable partner, particularly offering itsrich experience and manpower services. Another area where India and UAE can workin future is converting silica into thorium. Both countries have abundant silicaresources and India’s third-generation nuclear plan is based on thorium; the vast silicaresources on Kerala beaches will be of immense help. ● Non-conventional energy sourcesUAE has launched a 12 billion dirham Mohammad bin Rashid al Maktoum Solar Park,which will eventually produce 1000 megawatts of power. According to the DubaiIntegrated Energy Strategy 2030, the government is looking to diversify the source ofenergy, defining the target for renewable energy to supply 1 per cent of Dubai’s energyby 2020 and 5 per cent by 2030: most of it will be solar. 30 One of the largest solarmissions in Abu Dhabi is the MASDAR city project. The UAE government has alsoestablished an Ocean Thermal Energy Conversion (OTEC) unit. Silica is a good sourceof geo-thermal energy. In all these fields, India and UAE can share their expertise andresources. Indian companies such as LANCO and Indo-Solar are doing business andtalks with India’s TERI (Energy Research Institute) are also going on. However, the29 Ayob Kazin, “UAE’s Future Energy Plan”, Pacific Controls, 17 January 2012, Zaher Bitar, “Shaikh Mohammad launches Dh12b solar power project”, Gulf News, 9 January 2012, 14
  15. 15. two countries need to have a better and more coordinated pro-active policy in non-conventional sources of energy. ● Islamic Banking and Islamic FinanceIndia’s vast Muslim population provides a huge market for Islamic banking andIslamic finance, which operates on “interest-free” (Riba-free) banking principles.Besides this, India is one of the largest non-Arab Arabic knowing/speaking countriesin the world. This fact will overcome the language barrier as well. Otherwise, theEnglish-speaking population has the requisite ability to carry forward businessactivities, both in India and UAE. Arabic-speaking India scholars can assist theemirates to handle their stock exchange-related issues as well. ● Health and PharmaceuticalIndia has acquired an acclaimed status both for providing low-cost world class medicalservices 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 nowacquired a status of reliability and confidence, particularly in low-cost life-saving andAIDS 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 medicalcommunity, including care-workers, has been globally known for its efficiency anddedication. ● Research and Higher educationIndia within its scarce resources and in a limited time span has proved its mettle ineducation and research. UAE can benefit from India’s experience and build a strongR&D foundation and nurture an indigenous “knowledge community”, which will workas a bridge between the two nations. 15
  16. 16. ● India’s Balancing Act in the Region – Building Trust among Arabs and PersiansSince India has deep historical, political, economic and cultural relationships withalmost all the Trucial and Levant states, plus Saudi Arabia and Iran, it can play a keyrole in resolving and minimizing the trust deficit among all these nations. Looking atthe multiplicity of India’s own society, the Indian model can provide a suitablesolution or model to these countries passing through a high phase of transformation.Coexistence, secularism and liberal democratic setup may be helpful in reducing aswell as minimizing the acrimony arising in the form of Shia-Sunni divide, Arabs versusPersians and inter-tribal conflicts. India is the second-largest home of Muslims in theworld, with the second-largest Shia population after Iran. Its system has well absorbedas well as handled not only the different religious groups but also ethnicities, racesand regional diversities. ● Defence and Strategy - Contingency PlanningSince 2003, although both countries have started their engagements in defence and ona limited scale in strategic fields by holding an annual strategic dialogue, looking atthe growing instability in the region in general and on the seas in particular, the twocountries need to expand their engagements more widely and thoroughly. Thegrowing 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 vulnerabilityand India’s growing naval capability on the other, make close naval-relatedrelationship between the two countries a pragmatic affair. In recent years, Somalia hasbecome 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 shipstransit annually through the Gulf of Aden. Looking at the threat to the narrow Strait ofHormuz, through which one-fifth of the world oil passes daily, India and UAE alongwith other Gulf littoral countries such as Bahrain, Kuwait and Oman need to move at ahigher level of defence deals. 16
  17. 17. Another strategic area where India, which enjoys close relations with Iran as well, canplay a key role as mediator to help UAE is to resolve its dispute with Iran on the threeislands, Abu Musa, Greater Tunb and the Lesser Tunb, which are under Iran’soccupation 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, developingcrop seeds suitable to arid and hot regions, and cooperation in aquaculture andfisheries, etc. India’s peninsular shape makes it a natural maritime power in theIndian Ocean.The Ignored HorizonsThere are also some grey areas where the two countries need to work and improvetheir existing relationships. Foremost is the labour issue. India is the largest supplierof human resources to the UAE; the Indian citizens in UAE play a crucial role indeveloping and sustaining UAE’s growth and development. However, the interest ofthe expatriate community is not effectively protected; neither are they adequatelycovered with welfare programmes. Kharjis (expatriate workers) are differently treatedin terms of wage, working hours, and residential and medical facilities. The womenmigrant workers have their own specific problems. Although the two countries havesigned a manpower agreement in 2006 and revised it in 2011, there is slow progress inimplementing their provisions. Some issues like minimum wage, provision of pension,health insurance and developing some mechanism to safeguard loss against currencyfluctuation 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 policyconsideration by UAE authorities. This will not only add momentum to India-UAEbilateral relations but also help raise the image of UAE, in terms of soft power, amongcommon Indians. 17
  18. 18. Prescient ThoughtsThe changing strategic configuration in the Gulf has created a new permutation andcombination both in terms of strategic and economic interests. Europe is facing crisisand the US economy is in doldrums, while the Indian economy shows promise. Thereasons for India’s positive outlook might be the sustenance of the services industryand less reliance on exports. Importantly, the new region of the Indian Ocean isgaining international attention. In the 6th policy document which was released by theUS in January 2012, it was stated that the Indian Ocean as a region is gaining criticalmass both in terms of economic sustenance and increasing interdependence. Also, therevival of the IOR-ARC through India has propelled new developmental objectives andbetter integration of production and manufacturing networks, showing newalternatives to the globalizing world. IONS (Indian Ocean Naval Symposium), whichwas seen as an informal gathering, is now getting better attention to the extent thatthe West Pacific Naval Symposium and IONS are stated to be integrated together forbetter naval and maritime monitoring. This helps India’s purpose, strategically andeconomically as well.The countries of the Gulf region have been eying India for governance and structuralreforms and also to bring about incremental change in governance structures. In thislight the visits of the high-level Indian delegations to Oman, Qatar and Bahrain, whichincluded military delegations supplemented with return visits from these countries,show the increasing relevance of the region for India. Chinese ships that have beendeployed in the Gulf of Aden have been visiting these countries and docking at theirports both for entertainment and refuelling. This provides India the required strategicangle to engage with these countries. In this context, UAE emerges as one countrywhich is seen as an important hub: the historical and cultural linkages provide thenecessary foundation for a closer strategic relationship between the two countries.India’s relationships with the Gulf region in general and the UAE in particular hasalthough been more than 3000 millennium old; the connection between security and 18
  19. 19. stability between the two countries has been realised for the first time in 1981 whenMrs. Indira Gandhi visited and met the UAE President Shaikh Zayed. Both the leadersexplicitly stated that “peace in one region was important for peace in the otherregion”.31 Sheikh Zayed said “at a regional level, we also look forward to an increasedinvolvement 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, Indiapropounded the “look west policy” and acknowledged Gulf as its extendedneighbourhood and expressed to share the fruits of India’s growth and developmentwith the Gulf countries, including the UAE.Over the period, India has developed some significant stakes in the region; its morethan 6 million diaspora community with 29 percent (1.75 million) are working andliving in the UAE alone; they are religiously remitting more than $35 billion annuallyto India; India carries out approximately $120 to $130 billion trade with the region withUAE as its largest trading partner; and moreover, India resources 60 percent oil fromthe 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 thegrowing and expanding menace of piracy and threat to the safety and security of themerchant shipping on one hand and India’s growing naval stature in the Indian Oceanon the other, brought both the countries to seriously engage into security andstrategic dialogues.31 Gulshan Luthra Peace in the Indian Subcontinent and Strategic Gulf Interlinked: India and UAE ExemplifyFriendship, June 27, 2007, Ibid., n.6. 19