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News: Prime Minister Narendra Modi is going to attend the G7 Summit in Germany and a bilateral summit in Abu Dhabi with the UAE President Sheikh Mohammed bin Zayed Al-Nahyan.
Why is India’s participation in the UAE Summit more important than the G7 Summit?
If the U.S. is exempted, no G7 country comes close to the UAE as India’s trading partner, exports market, Indian diaspora base, and inward remittances.
The UAE has invested more Foreign Direct Investment (FDI) in India in 2021 than Germany and France combined.
Unlike the UAE, none of the G7 countries has yet signed a bilateral Comprehensive Economic Partnership Agreement (CEPA) with India.
Importance of the bilateral summit
The Abu Dhabi summit would be a useful opportunity to recalibrate the bilateral ties. It would open new vistas following the operationalization of the bilateral CEPA from May 1.
Features of the India-UAE Relationship
In recent years, India has witnessed investments in Jammu and Kashmir. Further, both countries have recently signed a bilateral CEPA
India is the UAE’s second-largest trading partner. India is also the largest source of tourists and manpower for the UAE. The bilateral trade grew by 68% in 2021-22 to $72.9 billion, which is a new record. The trade is likely to grow even higher in 2022-23.
In the bilateral political domain, the two sides have cooperated efficiently on security and anti-terrorism.
What are the challenges in the bilateral relationship?
The trade deficit has grown and reached $16.8 billion, also a new record, due to the CEPA. It happened due to robust economic revival, higher oil prices, and larger Indian imports.
Abu Dhabi has developed some disturbance with the US. Therefore, it is diversifying its strategic options with Russia and China. For example, it ignored the U.S. and other Western countries’ plea to raise its oil production.
Some developments in India’s interests
The UAE has disrupted the longstanding Arab Israeli stalemate by normalizing relations with Israel in 2020.
The UAE has shunned its muscular regional foreign policy against political Islam and in regional hotspots such as Syria, Yemen, Libya, Sudan, and Somalia, Abu Dhabi. It has decided to stage a phased withdrawal and improve ties with Syria, Qatar and Turkey.
What should be done?
Trade Related: The corrective mechanism built into CEPA can prevent the deficit from going out of hand.
Scope of engagement
Both countries have successfully contained the COVID-19 pandemic. They can pool their experiences.
India is the world’s fastest-growing major economy. It could be a lucrative market for investments in areas such as petrochemicals, pharmaceuticals, renewables, infrastructure, manufacturing, logistics, start-ups, etc.
The two sides can collaborate for the eventual reconstruction of the war-ravaged regional countries such as Yemen, Syria, Somalia, Iraq, Libya, and Afghanistan.
Both need to do more to fight money laundering and the flow of illicit narcotics.
Source: The post is based on an article “Modi’s two summits: UAE trumps G7” published in the “The Hindu” on 28th June 2022.
