In a year marked by significant diplomatic and economic advancements, the relationship between India and the United Arab Emirates (UAE) has transcended to a truly multilateral level. 2023 witnessed the strengthening of ties across various domains, including trade, defense, and multilateral cooperation, fundamentally reshaping the dynamics of the India-UAE partnership.
Strategic Economic Shifts
A landmark development in the bilateral relations was the implementation of the India-UAE Comprehensive Economic Partnership Agreement (CEPA), which came into effect on May 1, 2022. This agreement resulted in the UAE eliminating duties on 97.4% of its tariff lines, corresponding to 99% of imports from India. In return, India offered immediate duty elimination on over 80% of its tariff lines, accounting for 90% of its exports in value terms to the UAE. These tariff lines predominantly covered labor-intensive industries such as textiles, gems, and pharmaceuticals.
In July 2023, India and the UAE agreed to settle trade in their local currencies, the Indian Rupee and the UAE Dirham. This decision, a significant move away from traditional dollar-based trade, was seen as a symbol of deep-rooted trust and strategic partnership. It simplified the trade process, enhanced the prominence of both currencies in global trade, and indicated a shift towards a multipolar economic world.
Diplomatic and Multilateral Engagement
The year also saw India inviting the UAE to participate as a special guest at the G20 Leaders’ Summit in New Delhi, highlighting the strong bilateral relations and increasing synergy in international forums. The UAE expressed its commitment to multilateral action and constructive dialogue, emphasizing its role in supporting peace and development globally. This commitment was evident as the UAE joined the extended BRICS grouping, further underscoring the importance of emerging economies in the global order.
India’s Prime Minister Narendra Modi’s visit to the UAE in July 2023 was marked by wide-ranging discussions on mutual interests, including global issues concerning COP28 and India’s G20 presidency. The discussions focused on sustainable global growth and boosting collaboration in various fields like trade, energy, defense, and food security.
Economic Milestones
The bilateral ties have seen tremendous growth, especially in the domain of non-oil trade. The Comprehensive Economic Partnership Agreements (CEPA) program played a pivotal role in this growth, resulting in a significant increase in the volume of non-oil trade exchange between the two nations. The past decade has seen a consistent rise in trade volume, emphasizing the robust and evolving economic partnership.
Looking Ahead
As 2023 draws to a close, the India-UAE relationship stands as a testament to the potential of strategic partnerships in shaping a more interconnected and prosperous future. The year’s developments not only enhanced bilateral ties but also positioned the two nations as key players in the global arena, fostering economic and diplomatic ties that promise to yield substantial benefits for both countries in the years ahead.