Prime Minister Narendra Modi’s seventh visit to the United Arab Emirates (UAE) in February this year marks a significant milestone in bilateral relations. The visit saw an extensive review of the strategic partnership, with discussion on new areas of cooperation and the signing of several new agreements, including a bilateral investment treaty.

The relationship has witnessed an upswing over the last decade because of a growing convergence of interests. The joint statement released in the aftermath of PM Modi’s first visit to the UAE agreed to elevate the relationship to a “comprehensive strategic partnership.” While the India-UAE relationship has progressed positively since the established of diplomatic ties in 1972, what factors account for this more recent decadal upswing?

Geopolitical Convergences

India and the UAE have certain shared geopolitical goals. The security of the Indian Ocean and the Gulf is vital to the foreign policies of both countries. A mutual recognition of  the challenges emerging from both state and non-state actors has contributed to a common defence outlook. It has manifested in cooperation on maritime security and counterterrorism, among others. Bilateral defence cooperation has grown significantly since Sheikh Mohammad Bin Zayed Al Nahyan visited India for the first time in 2003, as chief of staff of the UAE armed forces, to attend the first India-UAE Strategic Dialogue.

Cooperation at the multilateral level has played out within geopolitically significant forums such as BRICS and initiatives like the India-Middle East-Europe Economic (IMEC) Corridor. India aspires to establish a new route via IMEC to Europe in order to obtain gas from the Eastern Mediterranean and to give Southeast Asian countries an alternative to China for access to the Atlantic Ocean. India has already established robust trade ties with countries of Southeast Asia via its Act East Policy. Through IMEC, India hopes to synergise its ‘Look East’ and ‘Look West’ Policies—the latter was unveiled in 2005.

India and the UAE’s diplomatic prioritisation of such platforms indicates the utility of multilateralism to their foreign policies. Their multilateral cooperation has also resulted in bilateral gains. Another example is I2U2, comprising India, Israel, the US and the UAE, through which New Delhi and Abu Dhabi have tangibly partnered for food security and renewable energy. I2U2 also provides strategic benefit, as a signal of the UAE and Israel’s interest in normalising relations, and India’s support of it. The UAE has been supportive of India’s bid for a permanent seat at the United Nations Security Council (UNSC).

Economic Mutuality

India’s growing interest in welcoming foreign direct investments since the 1991 economic reforms and the UAE’s bid for economic diversification has proved to be a linchpin in their bilateral economic convergence. Closer economic ties are a natural expectation given India’s rising potential as a major market and a rising force in Asia.

To achieve economic diversification, UAE looks at India as one of the most profitable countries for Sovereign Wealth Fund (SWF) investments. India has announced a 100 per cent tax exemption from interest, dividends, and capital gains income for investments made in infrastructure and other specific industries. India also sees the UAE as an important partner in its green transition to counter climate change. People-to-people and commercial relationships are another important factor helping to the strengthen ties between the two countries. The 3.5 million-strong Indian diaspora in the UAE plays an instrumental role in people-to-people contacts between the two countries. India’s public relations outreach with the diaspora has played a significant role in this instrumentalisation.

Development of India’s strategic petroleum reserves and collaboration in the space, nuclear energy, and education sectors are among the other agreed-upon points of mutual partnership. The two countries signed a Comprehensive Economic Partnership Agreement (CEPA) in February 2022, which increased bilateral commerce. The UAE is now India's third-largest trading partner, while India is the UAE’s second largest trading partner. Bilateral trade rose to US$ 85 billion in the year following the implementation of the CEPA.

A foundational aspect of this decadal upswing in economic ties is entrenched in India’s Look West Policy implemented under Prime Minister Manmohan Singh. Terming the Gulf as its “natural economic hinterland,” India began diversifying its relationship with the Gulf countries under its Look West Policy, to go beyond oil imports and diaspora remittances and in emulation the success of its Look East Policy.

Conclusion

India and the UAE have historically been able to craft a mutually beneficial relationship because of a convergence of strategic objectives at the geopolitical and economic levels. The recent decadal upswing in cooperation demonstrates increased geopolitical depth and economic expansion. These considerations are augmented by the political and personal capital invested by both countries' leaders, through frequent visits and interaction.

Dr. Muneer Ahmed is Senior Researcher with IPCS’ Centre for Internal and Regional Security (IreS).