Today's Editorial

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Alignment of India and UAE‘s interests

UAE’s significance for India:

• Look West Policy: India aims to strengthen ties with West Asian countries through economic, strategic, technological, and people-to-people cooperation. It aligns with the UAE's policy, allowing India to increase its regional influence.
• Entry into regional groups: India aims to join regional groups like the Gulf Cooperation Council (GCC) and the Organization of the Islamic Cooperation (OIC). The UAE can lobby for India's inclusion, potentially convincing group members, as it holds significant clout in these groups.
• Gateway to Africa and West Asia: The UAE, a strategic transportation hub, can assist India in entering Africa and the Gulf markets, fostering regional development and technology transfer through coordinated diplomacy between the two nations.
• Energy Requirements: UAE's stability and reliability bolsters India's strategy to diversify crude oil sources. Both countries have entered long-term contracts and strategic agreements to ensure a stable and reliable crude oil supply.
• Counter-Terrorism and De-radicalisation: India and UAE signed the Extradition Treaty in 1999, aiming to collaborate on counter-terrorism measures, de-radicalization, anti-money laundering, counter-terrorism financing, and countering extremist ideologies through intelligence sharing.

UAE’s inclination towards India:

• Gulf Cooperation Council (GCC): The GCC faces internal disputes and factions, including Qatar's economic blockade. India's non-interfering approach has positioned it as a reliable partner for the UAE.
• Failure of Pakistan: UAE sees India as a suitable destination for long-term investments and infrastructure development due to its rapidly growing economy and large market size as compared to Pakistan's frequent economic, political, and security crises.
• Competition from Saudi Arabia: ​​UAE and Saudi Arabia are engaged in geopolitical competition in the Gulf region, targeting economic diversification, energy sector, tourism, and infrastructural development. UAE aims to attract India for market catering.
• Sovereign wealth funds: The UAE, with its significant sovereign wealth fund, Abu Dhabi Investment Authority (ADIA), is seeking investment opportunities in infrastructure, start-ups, real estate, healthcare, education, and long-term investments, with India as a potential destination.

Some important developments:

• Local Currency Settlement System (LCSS): It is trade in local currencies between two countries.
  • For example, an exporter in India can make an invoice in rupees (INR), and an importer in UAE can pay in dirhams (AED). Hence reducing the reliance on third-party currency.
• Interlinking of Payment Systems: India’s Unified Payments Interface (UPI) is linked with its UAE-counterpart Instant Payment Platform (IPP). This is alongside the linking of card switches, the RuPay switch and UAE Switch.
• Skill development programmes:

• TEJAS (Training For Emirates Jobs and Skills) is focused on training, certifying and placing 10,000 Indian workers in UAE in its first year by partnering with some leading employers, such as EFS, Dulsco, TASC, Lulu Finance and more, in the region.
• National Initiative for Promotion of Upskilling of Nirman Workers (NIPUN) envisages training over 1,00,000 construction workers through fresh skilling and upskilling programmes and placing some in gulf countries.

Challenges in the relations:

• Migrant workers: UAE has many workers who have shifted there for low-skilled and semi-skilled jobs. The issues faced by migrant workers are problematic, for example, the kafala system, which gives private citizens and companies almost total control over migrant workers' employment and immigration status.
• Tariff rate: The tariff structure of UAE is bound by GCC. Now that the CEPA has been in place, the tariff structure has been subject to relaxation, but it still remains a matter of concern. The sanitary and phytosanitary measures are also tightly held.
• Diplomatic ire: West Asia is known for its geopolitical complexities and conflicts. India's engagement with the UAE could attract the ire of other regional nations. Balancing the relations while strengthening the India-UAE strategic partnership is a diplomatic challenge. 
• Investment in green technologies and climate change: The UAE is an oil-exporting economy, so it doesn’t readily want to invest in green technologies. Meanwhile, India has set a net zero target of 2070 and is currently focussing on transitioning to a green economy. The alignment of both nations on this issue is debatable.

Way forward:

• Labour rights and Skill development: India needs to work with the UAE to ensure workers have rights and proper living conditions. Meanwhile, India is working on providing skills to Indian workers in the UAE; both countries can collaborate to strengthen and diversify the job prospects of migrant workers.
• Climate change and sustainability: India should convince the UAE to work together in environmental sustainability. A massive investment in green technologies should strengthen mitigation efforts further. Research and development and knowledge sharing should be a part of the measures, ultimately leading to technology transfer.
• Cybersecurity: There is a need to develop robust cybersecurity measures and establish contingency plans for cyberattacks in both countries. Meanwhile, Data Embassies announced in the Union Budget 2023-24 could be set up.