Why India-UAE trade relations have become so significant?
- India is mainly looking for investment in its energy sector, particularly in oil and renewable energy sector
- India’s market standing also gets a reassurance despite the inner turmoil
Here’s why India-UAE trade ties have become so important:
1. India and the United Arab Emirates in February this year signed a wide-ranging set of seven agreements, including on cyber security, infrastructure investment and insurance after talks between Prime Minister Narendra Modi and Crown Prince of Abu Dhabi Sheikh Mohammed bin Zayed Al Nahyan. These cultural ties have become important because last these ties were brokered by Indira Gandhi when she was the prime minister.
2. During Prime Minister Narendra Modi’s visit to the UAE in 2015, the two sides had agreed to establish a UAE-India Infrastructure Investment Fund, setting an ambitious target of $75 billion to support investment in India's infrastructure. Both sides have set up a task force to nudge investments under this fund. So Modi will be looking to draw most out of this fund.
3. Indian exports to UAE mainly include gems and jewellery, vegetables, fruit, spices, engineering goods, tea, meat and its preparations, rice, textiles and apparel and chemicals. Indian imports from UAE mainly include crude and petroleum products, gold and silver, pearls, precious and semiprecious stones, metal ores and metal scrap, electronics goods and transport equipment.
4. UAE mentioned in the February talks that it was keen to increase its import of food from India. So we can expect Indian exports to go up bringing in more currency.
5. India is mainly looking for investment in its energy sector, particularly in oil and renewable energy sector, in infrastructure development, real estate and the defence industry. For India’s energy security, UAE is an important country as it gets 9.4 per cent of total crude requirement from that country. The volume of supply in 2014-15 was about 16 million tonnes.
6. With a strong partner like UAE, India stands to gain a lot. Its market standing also gets a reassurance despite the inner turmoil that the country is witnessing. According to the Central government figures, in FY 2014-15, trade between India and UAE crossed US$ 59bn, with Indian exports worth US$ 33.3bn to the UAE, while UAE exported US$ 26bn worth of goods to India, thus making UAE one of India’s top trading partners