Hindustan Times | 3 February 2024
India, UAE to take economic ties to next level with bilateral investment treaty
By Shishir Gupta
India and UAE will integrate their economies when Prime Minister Narendra Modi signs Bilateral Investment Treaty (BIT) with President Mohammed bin Zayed Al Nahyan during a big ticket visit to Abu Dhabi and Dubai on February 13-14. UAE is the third largest source of FDI into Bharat and seventh largest trade partner of India.
While the Modi government is tight-lipped about the visit, it is learnt that the PM’s trip to UAE will be a milestone as India already has a comprehensive economic partnership agreement with Abu Dhabi from February 2022.
To put the BIT in perspective, the treaty was cleared by the Modi cabinet on February 1 after which UAE became the only country with which India has both CEPA and BIT. Even countries like South Korea, Japan and Singapore have a CEPA with India but no BIT.
It is understood a host of big items are on PM Modi’s agenda apart from his inaugurating the BAPS Hindu Mandir in Abu Dhabi, a Bharat Mart for Indian MSMEs to trade in Dubai and the Indian leader is the keynote speaker at the government summit in Dubai.
PM Modi will have a separate engagement with Sheikh Rashid A Maktoum in Dubai apart from his bilateral engagement with President MBZ. PM Modi shares a close relationship with President MBZ, who surprised everyone when he spoke at the Vibrant Gujarat event this year as the UAE ruler hardly ever addresses any global event including G-20 in India or COP 28 in UAE.
While India is already buying crude from UAE on local currency basis, GAIL last Monday signed an agreement with UAE to purchase 0.5 million metric tons of natural gas from the Emirates.
In 2023, India signed an agreement to purchase 1.2 million metric tons of LNG with the UAE as India look to diversify its gas purchases and not remain dependent only on one country in the Gulf.
The India-UAE bilateral investment will pave the way for Abu Dhabi Investment Authority, a UAE sovereign wealth fund worth over USD one trillion, and another sovereign fund Mubadala Investment Fund, worth nearly USD 500 billion, to invest in big ticket projects in India.
India and UAE are also key partners in the Middle-East Economic Corridor project, which links Mundra Port in Gujarat to Fujairah Port in UAE by sea, then to Saudi Arabia and Jordan by railroad and there on to Europe via sea as the new trade route to rival Chinese new Silk Road project and North-South corridor via Iran.