India-UAE Business Council: The best foreign policy is one that not only tackles current geopolitical situations for the benefit of the nation but is also based on long-term perspective. India’s foreign policy seems to be in consonance with this. India is fortifying ties with the West while also focusing on the Global South.
Until about a decade ago, the United States and Europe were the two biggest trading partners in the world. Almost every developing country preferred trading with them. But as of now, these traditional markets are slowing down. Aside from that, developing countries are also witnessing enormous opportunities in global trade. India too is witnessing this trend, which explains why Indian foreign policy has a comprehensive approach to the world.
When it comes to the Middle East, China too has deep ties. It uses filthy tactics to counter India’s growing influence in the region. As a result, India is fortifying its relations from east to west. In line with this, PM Narendra Modi gave a new impetus to former PM Narsimha Rao’s “Look West” policy with the “Link West” policy. This has obvious implications for India’s relations with the UAE, which are not only bilateral but also strategic.
Also read: Alliance of India, France, and the UAE: A new era of cooperation for global leadership
India-UAE Business Council post-CEPA
The Comprehensive Economic Partnership Agreement was signed by India and the UAE last year. This free trade agreement was signed at a virtual summit by Prime Minister Narendra Modi and UAE President Sheikh Mohamed bin Zayed Al Nahyan. It was India’s first bilateral FTA in the Middle East and North Africa (MENA) region.
On Friday, a special business event was held in Dubai to commemorated the successful year of CEPA signing. The Federation of Indian Chambers of Commerce and Industry (FICCI) organised the event in collaboration with the Embassy of India in Abu Dhabi, the Consulate General of India in Dubai, and the Dubai Chambers.
Thani bin Ahmed Al Zeyoudi, UAE Minister of State for Foreign Trade, also launched the India-UAE Business Council – UAE Chapter (UIBC-UC), in the presence of Ambassador of India to the UAE Sunjay Sudhir, Consul General of India in Dubai Aman Puri and founding members of the UBIC-UC. The event was a manifestation of the CEPA’s success. Let us go over the details of CEPA and its consequences to better understand it.
Also read: I2U2 bears fruit as UAE looks to invest $2 billion in India
FTA and its consequences
According to the data, India and the UAE’s bilateral trade increased by a whopping 27.5 percent after the FTA. During the first eight months of the current fiscal year, from April to November, trade totaled $ 57.8 billion. This is a $12.5 billion increase year-over-year from $45.3 billion.
During the same period, India’s exports to the UAE increased by 19.31 percent, reaching $20.8 billion from $17.35 billion. According to Sanjay Sudhir, Indian and UAE businesses are taking advantage of the CEPA’s duty waivers and other benefits. Following the 95% coverage of tariff line, new industries are approaching the UAE.
Within the framework of the India-UAE Business Council, the two countries aim to trade $100 billion in goods over the next five years, with $15 billion in service trade. Aside from that, India will receive a $75 billion worth of investment.
Also read: UAE welcomes India with open arms, and Pakistan has a problem with that too
The China angle to the story
In the current world order, China is without a doubt India’s most significant competitor. India’s growth is stinging in the eyes of Chinese. But it’s not as if China was unaware of India’s capabilities.
Instead, it always believed that its possible challenger was India. Perhaps that was the reason—it was always instigating territorial disputes in order to keep India out of Global reach. Against it, India seems to have aligned its global reach with a possible confrontation of Chinese influence across the world.
From Latin America to Africa, and from West Asia to East Asia, China sees India’s aggressive foreign policy as a threat to its expansionist policy. If we specifically talk about the UAE, its biggest trading partner is China, followed by India. In the financial year 2021, China-UAE trade stood at $60.06 billion.
The UAE’s trade with India was $43 billion, followed by the US with $24.47 billion. So, if the $100 billion target is met within the next five years, China will suffer a significant setback. The MENA region is home to a large amount of world trade. The Gulf and oil exports are crucial to the region. It is estimated that the UAE will soon become the gateway for 90% of global trade. This simply means that it will serve as a trade hub as well as a gateway to North Africa. In order to trade on the western coast of Africa, it will play a crucial role.
It is worth noting that China is one of Africa’s largest stakeholders. It is exploiting the small and poor countries of the continent. India is proving to be a viable option for countries looking for more secure investment and a guarantee of humanitarian assistance during any crisis. As a result, India is strengthening ties with MENA countries, the most prominent of which is the UAE.
Also read: Statistically challenged Liberals celebrated UAE’s so-called ban on India and immediately regretted
India-UAE Business Council: Building ties
PM Modi is the first Prime Minister to visit the UAE in 34 years. The UAE’s support for India’s decision to repeal Article 370, which grants special status to Jammu and Kashmir, has significantly improved relations.
With each passing year, India-UAE relations grew stronger. In 2018, both countries agreed to trade in local currencies rather than dollars in non-oil trade. In 2021, India, Israel, the United States, and the United Arab Emirates announced the I2U2 bloc, with six focus areas: water, energy, transportation, space, health, and food security. The Western Quad is a group that was formed to counter China’s influence in West Asia.
Recently, India, along with the UAE and France, formed an alliance that is informally called the “Rafael Group” to strengthen cooperation in solar as well as nuclear energy. Another aspect of the initiative was their dedication to focusing on the Indian Ocean region. In addition, this FTA will be the most significant boost to the thriving relations.
Also read: Free Trade Relations between UAE and India will make Imran Khan run for his money
The future of oil trade with the UAE
Speaking of the oil trade, there is an important question. Why did India not consider importing Russian oil before the Ukrainian war? Well, the answer is that India procures the majority of its oil from the Gulf countries because the oil trade is carried out by sea routes and India has to pay less for the Persian Gulf shipments as compared to Russian shipments, which are far away. So, another question that may arise is, “Why now?” It is only because the prices are low and Russia, which is sanctioned, has fewer options.
So, one thing is pretty clear: once the war is over and the sanctions are lifted, Russia will elevate the price once again, and India will have to shift its imports to the Gulf. At that very time, relations with the UAE will become important. Although, back in 2021, Iraq and Saudi Arabia were the biggest exporters of oil to India. But they were followed by the UAE. As a result, India is also broadening its supplier base.
Also read: India and UAE team up to take on Pakistan
An opening of the door for more FTAs
With the launch of India-UAE Business Council, bilateral trade relations will get a further boost. And, as it is clear that the relations between India and the UAE have a strategic thrust too, it must not be ignored that India’s economic strength becomes the basis for its approach. That is why CEPA is significant. The success of the FTA will encourage other countries, possibly the MENA countries like Saudi Arabia, to negotiate the CEPA with India.
It is worth noting that the first vice-ministerial meeting of the I2U2 is to be held in the UAE in the coming days. And it will be interesting to see what comes out of the meeting. One thing is certain: the friendly relations between India and the UAE are bad news for China.
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