By Deepti Mahajan Mittal*
It was only a week ago that a colleague – an Indian national, and I, spoke of the business legacy of Indian expatriates in the UAE and the contribution that many have made to the development of education and health facilities in the country. The conversation also led us to speak of India’s diplomatic ties with the country and the fact that no Indian prime minister had visited the country in over 30 years. When I heard that Indian Prime Minister Narendra Modi is set to visit the UAE on August 16 and 17, I sent my colleague a message expressing surprise at the timeliness of our conversation (or perhaps the timeliness of Modi’s visit)!
The two countries share strong trade and investment ties. According to Government of India figures, India-UAE trade crossed US$59 billion in FY 2014-15, making the country India’s third largest trading partner after China and the US. India was UAE’s largest non-oil trading partner last year. At the end of 2013, the countries signed a Bilateral Investment Promotion and Protection Agreement (BIPA). UAE’s investments in India are understood to be to the tune of $8 billion with an additional $2 billion commitment towards infrastructure. UAE investors in India include Emaar MGF, DP World and RAK Ceramics, amongst others. Indian investments in the counterpart country are estimated to stand at about $55 billion.
Further, UAE is home to a large population of Indian expatriates which has tied the countries socially and culturally. Indians in the UAE are the largest remitters globally, and remitted $12.64 billion to their home country in 2014. India is also the third largest source of tourists travelling to the UAE.
The countries have a clear interest in maintaining and strengthening their bilateral economic relationship, and Prime Minister Modi’s visit to the country – the first prime ministerial visit after Indira Gandhi’s in 1981, could contribute immensely to this end. With large infrastructure investments being planned in both India and the UAE, business interests on both sides are presented with opportunities for infrastructure investments (in transport and real estate) on foreign shores.
In the domain of energy – oil and gas, power and renewables, trade and investment opportunities have been tapped into in the past, and hold potential for further exploration. In 2012, Abu Dhabi’s National Petroleum Construction Company acquired an engineering and construction contract from India’s Oil and Natural Gas Corporation to build offshore platforms in the Mumbai High field. In terms of crude oil trade, during FY 2014-15, India imported 16.11 million tonnes of oil from the UAE, registering an increase of 15% over the previous financial year.
UAE’s investments in the Indian power sector, in addition to being a commercial interest, can contribute towards the developmental goal of expanding power access and enhancing quality of supply. India’s electricity sector is in need of large investments: Minister of State for Power, Coal and New and Renewable Energy, Piyush Goyal, has stated that more than $250 billion in investment will be required in the next few years to make uninterrupted power supply available to all by 2019. It is encouraging that UAE has already forayed into power projects in India. Following UAE’s promise on infrastructure investments and the signing of BIPA, in a large foreign investment deal agreed in 2014, a consortium led by the Abu Dhabi National Energy Company PJSC (TAQA) acquired the 300-MW Baspa-II and the 1,000-MW Karcham Wangtoo power projects in Himachal Pradesh, from Jaiprakash Power Ventures Limited. The consortium in which TAQA has a 51% stake, is investing $616 million in the two plants. In addition, India’s manufacturing capacity in solar technologies provides an avenue for cooperation as UAE expands its installed renewable energy. The UAE delegation attending the High Level Joint Task Force meeting in 2014 called on Indian clean energy investors to explore investment possibilities with Masdar, a subsidiary of Abu Dhabi government’s Mubadala.
Bilateral economic opportunities also emerge in the areas of information technology, and research and development. The year 2015 has been earmarked as the ‘Year of Innovation’ by the UAE government. As the UAE government facilitates the transition of the country into a knowledge-based economy, India’s technology institutes and research centres can partner with local UAE stakeholders to build mutual capacity and know-how.
India has critical economic, political and cultural linkages with the countries of the Gulf. While UAE has been a key partner for non-oil trade, Saudi Arabia and Kuwait have been amongst the largest suppliers of crude oil to the energy-hungry Indian economy. As the region goes through a period of instability, it is in India’s economic, as well as political, interest to maintain sound ties with economies in the region that are taking bold domestic initiatives to build resilience in a testing period of oil price fluctuation and sluggish global growth rates. UAE is one such country, and PM Modi’s visit will, hopefully, fortify India’s ties with the desert economy.
*Deepti Mahajan Mittal is an international affairs and energy analyst based in Dubai, UAE and holds a Doctorate degree. She can be reached at [email protected]