An economic agreement between the UAE and India breaks new ground

An online summit on Friday between Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, and Indian Prime Minister Narendra Modi broke new ground in economic links between the Gulf and the Indian subcontinent. Both leaders might have been separated by a great physical distance, but the overall impression was one of the two countries coming closer together. The summit culminated in the signing of an 881-page UAE-India Comprehensive Economic Partnership Agreement (CEPA).

“The fact that we were able to agree the terms of a deal of this size, scope and importance within five months, demonstrates the power of our shared vision,” said Abdullah bin Touq Al Marri, the UAE Minister of Economy, in a press conference in New Delhi on Friday.

That shared vision is already on a strong footing; the UAE is India’s third-largest trade partner and bilateral non-oil trade is anticipated to rise to $100 billion within five years. The two also have a number of recent major foreign direct investment deals.

CEPA is expected to lead to more economic co-operation, trade and investment between the two.

It is one of the biggest milestones in the history of the bilateral relationship and the culmination of a longer period of increased co-operation over the past few years, which kicked off with a visit by Mr Modi to the UAE in 2015. Since then there have been four official trips between the leaders, and in 2017 both countries signed the Comprehensive Strategic Partnership.

The benefits of CEPA and today's wider discussions go beyond the bilateral realm. In September of last year, during talks in New Delhi on the formation of CEPA, Thani Al Zeyoudi, UAE Minister of State for Foreign Trade, described the deal as a moment to “strengthen the UAE’s position as a global gateway to Africa, Asia and Europe, driving economic growth and prosperity across the region”.

The UAE’s economic shift towards Asia is the context in which growing relations with India should be viewed. It is not just in New Delhi where Emirati officials are building on key trading relationships. China, for example, is the UAE’s largest non-oil trading partner, worth roughly $47bn in 2020. Saudi Arabia is second at almost $30bn. That means the country’s top three non-oil trading partners are not in the West, but the East. Building ties with eastern allies will be key to maintaining the UAE’s status as a global commercial hub. There is particularly great potential with India, given that an estimated 3.5 million Indian citizens live in the Emirates, making them the country’s largest expatriate community.

Just the numbers of this burgeoning relationship give a clear sense of its huge value. But in the face of dizzying economic and social statistics, it is important to remember that ties run deeper. The millions of Indian citizens living in the country make a huge contribution to life in the UAE, helping make it one the most diverse societies on the planet. While today is one to celebrate shared prosperity, it is also one to celebrate a social bond that has been with the UAE since its foundation.