India and the UAE have signed seven agreements, including a Bilateral Investment Treaty (BIT) and an Intergovernmental Framework Agreement on the India-Middle East-Europe Economic Corridor (IMEC). These pacts will enhance trade, investment, energy and digital cooperation between the two countries and beyond.
What is IMEC?
The IMEC is a visionary initiative that aims to connect India, the Arabian Gulf and Europe through a network of railways, shipping lines, cables and pipes. The IMEC will stimulate economic development, create jobs, reduce costs, improve trade facilitation and lower greenhouse gas emissions.
The IMEC will consist of two corridors: the east corridor connecting India to the Arabian Gulf and the northern corridor connecting the Arabian Gulf to Europe. The railway will provide a reliable and cost-effective cross-border transit network that will supplement existing maritime and road transport routes. The cable will enable electricity and digital connectivity, while the pipe will facilitate clean hydrogen export.
Why it is important?
The IMEC is expected to secure regional supply chains, increase trade accessibility and enhance economic integration between Asia, Europe and the Middle East. The IMEC will also support an increased emphasis on environmental, social and governance impacts.
The IMEC agreement was co-signed by India, the United States, the UAE, Saudi Arabia, France, Germany, Italy and the European Union in September 2023. The signatories have committed to work collectively and expeditiously to arrange and implement all elements of the new transit routes and to establish coordinating entities to address technical, design, financing, legal and regulatory standards.
How will IMEC benefit India and UAE?
The IMEC is a result of India’s growing strategic partnership with the UAE and its expanding engagement with the Middle East and Europe. The IMEC will benefit not only India and the UAE, but also the wider region and the world.
According to data from Embassy of India in Abu Dhabi , India-UAE trade was valued at US$ 73 billion in 2021-22, making UAE India’s third largest trading partner after US and China. Moreover, UAE was the second largest export destination of India (after US) with an amount of over US$ 28 billion in 2021-22. India imported 21,664.42 MMT (US$ 12,304.83 Million) of crude oil from UAE in 2021-22.
The BIT will be a key enabler for further promoting investments in both countries. India has signed both BIT and Comprehensive Economic Partnership Agreement (CEPA) with the UAE. The CEPA will unlock new opportunities in bilateral trade and it is expected to increase the bilateral trade in goods to US$ 100 billion within five years and trade in services to US $ 15 billion.
The agreements on interlinking of the instant payment platforms (UPI-AANI) and domestic debit/credit cards (RuPay-JAYWAN) will facilitate seamless cross-border transactions between the two countries. The MoU on cooperation in digital infrastructure projects will create a framework for a wide ranging cooperation in the digital sector.
The MoU on cooperation in the field of electrical interconnection and trade will open new areas of collaboration in the field of energy, including energy security and energy trade. The cooperation protocol between the national archives of the two countries will shape extensive bilateral cooperation in this field.
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