India-UAE inks Civil Nuclear Deal

Abu Dhabi Crown Prince on 3-day India Tour

Abu Dhabi Crown Prince on 3-day India Tour

Starting 10 February, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces of the UAE Prince Mohammed bin Zayed Al Nahyan will be on his maiden official visit to India for three action packed days that is set to bring Indo-UAE relations even closer.

The fact that his visit comes just six months after PM Modi’s historic visit to the UAE, signifies the importance the kingdom state places in developing closer business, security, diplomatic and cultural ties with India.

Speaking on similar lines, UAE Ambassador to India Ahmed Al Banna spoke to the media confirming that the Crown Prince will be accompanied by seven senior ministers and a high-powered business delegation of over 90 top business leaders of UAE. He said that UAE places great importance in developing closer ties with India and towards that 16 important pacts were due to be signed over the next three days, of which 12 were already in place.

The pacts will cover peaceful use of nuclear energy, oil & gas, renewable energy, financial services, IT, security cooperation and sharing of terror-related information, investment in infrastructure, railways, and urban development.

Highlights of the tour

The highlight of the tour will be the historic signing of the India-UAE Civil Nuclear deal that will see India offer assistance in operating and maintenance of nuclear plants, besides conducting joint research in the civil nuclear space. UAE has similar agreements in place with US, Russia, France, UK, Japan and South Korea. For India, this will be a first such deal on nuclear cooperation signed with any West Asian country.

The agreement will be signed between the two countries when the Crown Prince and his delegation holds a bilateral meeting with the Indian delegation led by PM Modi on 11 February. The Crown Prince will also be meeting President Pranab Mukherjee where he will be greeted with the ceremonial welcome reserved for Heads of State.

On the 12th, the delegation will move to Mumbai to attend the ‘Invest in India’ symposium. This will include a business-to-business between the Indian and UAE industry leaders, and is expected to result in higher trade and investment flow between the two countries.

It is possible that the Crown Prince may extend his visit by a day and attend the ‘Make In India’ roadshow starting on the 13th in Mumbai.

Why is UAE so important to India?

UAE is the gateway to West Asia and has had a long tradition of trade with India going back centuries. The vast diaspora of expatriate Indians living and working in the UAE have contributed significantly in transitioning of the desert kingdom into a modern state.

With India now poised to emerge as a major economic and military powerhouse, UAE sees in India a strong and reliable partner with whom it already enjoys a friendly and stable relationship. India recognizes UAE’s contribution as a stabilizing factor in an otherwise volatile West Asian neighbourhood.

India also recognizes the fact that the Abu Dhabi Investment Authority (ADIA) is a $800 billion Sovereign Fund owned by the Emirate of Abu Dhabi. The ADIA has been set up to make long term investments on behalf of the Emirate and India offers attractive and safe long term investment opportunity, since it requires over $1 trillion dollars in infrastructure related development in coming years.

Although a Bilateral Investments Protection Agreement (BIPA) had been signed between the two nations over three years back, it has not really resulted in significant flow of investments into India. Bilateral trade between the two nations which had touched $75 billion in 2012-13, actually saw a decline to $59.54 billion during 2013-14. As on August 2015, investment flow from UAE was just $8 billion, which included $3 billion in FDI and around $5 billion in FII.

However, it was PM Modi’s visit to the UAE last August that rejuvenated the relationship and saw UAE committing to invest $75 billion for infrastructure development in India, spread across sectors. And therefore, this trip is seen as significant not just for investment but for overall strengthening of bilateral relationship.

Security cooperation – a critical focus area

With rising influence of ISIS and its related violence in the Middle East, UAE is concerned about its growing influence and is seeking to increase cooperation with countries that can play a part in ensuring that stability. India, with its large expatriate community in the UAE can influence the stability to an extent, besides offering military training and equipment.

For India, strengthening security cooperation and information sharing with UAE is critical, since crime and terror had both found a haven in the UAE, especially Dubai, which had emerged as a financial transit point for a lot of illegal activity.

However, with the UAE now cracking down on all such activities, criminals are now finding UAE a hostile nation. In the last year alone, UAE has deported to India over a dozen persons linked either to terror or criminal networks, and further strengthening of security cooperation will only benefit both countries.

Infrastructure development will get a boost

From an earlier target of developing 96,000 kms of highways in the country, India now plans to build 200,000 kms of highways. That is an ambitious target which will require large amount of long term capital. This is an area that is of interest to the UAE as they have large funds that are looking to be deployed in long term but stable economies, and India offers a very good long term option.

Similarly, Indian Railways is looking at over $25 billion to modernize the rail infrastructure and UAE could well emerge as a major financial partner for India in funding this modernization.

India is in the process of kick starting the world’s largest urban renewal plan with over 100 Smart Cities being planned. This is another area that will require large infusion of capital and is another area of interest for UAE investment.

India, too has a critical role to play in developing UAE’s infrastructure, trade and industry, as UAE seeks to transition itself into a modern hub for sustainable living, accompanied by state-of-the-art infrastructure to support all business activity and services. India with its developing industrial base and large pool of trained but relatively low cost manpower, fits into UAE’s future plans well.

The forthcoming bilateral business-to-business meet in Mumbai on 12 February is likely to boost bilateral cooperation across several sectors. This is one win-win relationship that’s needs to be strengthened further.

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