Free trade pact and the India-UAE growth story | World News

Work on the comprehensive economic partnership agreement (CEPA), to be signed during a virtual summit on Friday, began in September last year and was largely completed by December. In much the same way, relations between the two countries moved into high gear after Prime Minister Narendra Modi’s visit to the UAE in 2015, the first by an Indian head of government in 34 years.

According to estimates, India-UAE trade is expected to return to the pre-pandemic level of $60 billion during the current financial year, and the CEPA is set to give commerce a substantial boost. Investments from the UAE into India are worth almost $17 billion, up from $3 billion in 2014, and business groups from the emirates have shown interest in investing in places such as Jammu and Kashmir.

The upturn in relations is an outcome of the Indian government’s efforts to woo key players in West Asia, which New Delhi describes as part of the country’s “extended neighbourhood”. This focus is understandable as some nine million Indian nationals live in the region, and the UAE alone is home to some 3.5 million expatriates, the largest ethnic community in the emirates accounting for 30% of the country’s population.

Close energy cooperation has always underpinned India’s relations with West Asian powers such as the UAE, but in recent years, there has been a marked uptick in cooperation in such crucial areas as defence and security. The Indian Army chief made a landmark visit to the UAE in December 2020 — the first such trip from the Indian side — and he was followed by the Indian Air Force chief in August 2021.

India’s efforts also resulted in the unprecedented invitation from the UAE for then external affairs minister Sushma Swaraj to address a meeting of foreign ministers of the Organisation of Islamic Cooperation (OIC) in Abu Dhabi in March 2019.

People familiar with the matter said there has also been a marked difference in the UAE’s approach to investments in India as there are no longer inhibitions related to “legacy issues” such as the problems faced by real estate development firm Emaar and telecommunications major Etisalat. Emaar MGF Land was the subject of a probe by the Enforcement Directorate over the purchase of agricultural land, while Etisalat exited operations in India after the Supreme Court cancelled mobile licences of 10 companies in the 2G spectrum case.

Issues raised by the UAE side are currently addressed through a high-level task force on investments, which last met in October 2021, the people said.

Energy cooperation too has been transformed with the UAE’s participation in India’s strategic reserves and the offer of stakes in two fields to Indian companies. The UAE is currently India’s third-largest supplier of crude oil and the second-largest supplier of LPG and LNG.

India and the UAE also coordinate their positions at the United Nations Security Council as non-permanent members for this year, and there have been regular consultations on regional issues, including the situation in Afghanistan, for which the UAE’s presidential adviser, Anwar Gargash, visited New Delhi after the Taliban assumed power in Kabul in August 2021.

The Abraham Accords between Israel and West Asian states such as the UAE have also opened the doors for trilateral cooperation with India, and the three countries joined hands with the US last year to form what is being referred to as the “West Asian Quad”, a grouping that intends to focus on economic and infrastructure projects. The foreign ministers of the four countries are expected to meet in the first quarter of 2022 in Dubai.

However, there have been calls for India to proceed cautiously in the matter of the CEPA, with warnings from some quarters that the agreement will have more benefits for the duty-free UAE economy due to the greater need for India to reduce tariff barriers, and that the emirates could become a base for re-exporting goods to India. The current balance in bilateral trade too is in favour of the UAE, with India’s exports during April-October 2021 amounting to $15.36 billion and imports accounting for $ 24.27 billion.

The people cited above said adequate safeguards have been built into the CEPA to prevent its misuse by third countries, especially China, and a strong focus on the origin of goods.