External Affairs

India, UAE Expand Ties, But $75 Billion Investment Still in Limbo

The countries signed 14 pacts in key areas like defence and security, however, an agreement to facilitate investments in infrastructure projects in India could not be finalised in time.

Sheikh Mohammed bin Zayed al-Nahyan, Crown Prince of Abu Dhabi and UAE's deputy commander-in-chief of the armed forces shakes hands with India's Prime Minister Narendra Modi (R) during a photo opportunity ahead of their meeting at Hyderabad House in New Delhi, India, January 25, 2017. REUTERS/Adnan Abidi

Sheikh Mohammed bin Zayed al-Nahyan, Crown Prince of Abu Dhabi and UAE’s deputy commander-in-chief of the armed forces shakes hands with India’s Prime Minister Narendra Modi. Credit: Reuters/Adnan Abidi

New Delhi: Even as India and UAE formally advanced their relationship to a comprehensive strategic partnership, they failed to sign an agreement to facilitate investments in infrastructure projects in India from the $75 billion UAE-India infrastructure investment fund.

During Abu Dhabi crown prince’s second state visit within one year, 14 pacts were signed, including the comprehensive strategic partnership, which would act as the general framework agreement to corral the goals set by the two leaders.

After his last trip in February, the crown prince has returned for an early visit as the chief guest at this year’s Republic Day parade.

He arrived in the country on Tuesday afternoon with a large high-powered delegation of ministers, military officers and government officials and was greeted by Prime Minister Narendra Modi at the airport. On Tuesday morning, he was given a reception at the forecourt of the Rashtrapati Bhavan.

In a shift from protocol, Modi first hosted the royal visitor at his residence before going for the formal delegation-level discussions at Hyderabad House. The agreements were then signed as the two leaders waited at their podium to make their statements.

The agreements range from ones on defence, prevention of human trafficking, maritime transport, implementation of strategic petroleum reserve and cyberspace. Several of them take forward decisions that were taken in the last two summits.

However, an anticipated Memorandum of Understanding (MoU) that would have operationalised the investment could not be finalised in time for the agreement.

In August 2015, during Prime Minister Modi’s visit, the two sides had agreed to establish a UAE-India infrastructure investment fund “with the aim of reaching a target of $75 billion to support investment in India’s plans for rapid expansion of next generation infrastructure, especially in railways, ports, roads, airports and industrial corridors and parks”.

The National Infrastructure Investment Fund, established for this purpose last year, attained a CEO only a few months ago. So far only a single meeting has been held.

On Monday, the UAE ambassador Ahmed Al-Banna had said that the “ball was in India’s court” to get the governance structure for the fund in place. Even on Tuesday, a senior Indian diplomat expressed hope that a MoU would be signed – but it is obvious that it was not ready in time.

“We are working to connect the institutional investors in UAE with our National Investment and Infrastructure Fund,” Modi said in his press statement.

He reiterated India’s interest in becoming a partner in infrastructure projects for the World Expo 2020 in Dubai.

“UAE can benefit by linking with our growth in manufacturing and services. We can jointly tap abundant opportunities in our initiatives aimed at building digital economy, human capital and smart urbanisation in India,” Modi said.

In order to increase the bilateral trade, which is currently at $50 billion, an agreement on trade remedial measures was inked, which aims to provide a predictable legal framework and a consultative process before any anti-subsidy or anti-dumping investigation begin.

Describing the energy partnership as an “important bridge”, Modi noted that, “long-term supply contracts and the establishment of joint ventures in the energy sector can be beneficial avenues.”

One of the agreements signed today was framework pact for the storage of crude oil by Abu Dhabi National Oil Company in India’s strategic oil reserves.

Speaking about the importance of India-UAE ties, Modi said that the “economic partnership could be a source of regional and global prosperity”.

He stressed that there was a wider significance in closer ties between India and UAE. “We exchanged views on developments in West Asia and the Gulf, where both countries have a shared interest in peace and stability. We also discussed developments in our region, including Afghanistan,” said the Indian PM.

The Crown Prince asserted that “UAE with its unique development experience and Islamic and Arab background and India with its inimitable and successful development experience and its unique model of coexistence, can work together to push for peace and stability in Asia and the Middle East.”

There has been a rising convergence between India and UAE on the terror issue, with both talking of the need to combat terror groups, without any discrimination. Recently, five UAE diplomats were killed and the UAE ambassador was injured in an attack in Kandahar in Afghanistan, which traced to the Haqqani network.

“Our shared concern on growing threat from radicalism and terrorism to the safety and security of our people is shaping our cooperation in this space,” he added.

A separate roundtable was held on Wednesday between a ‘tolerance’ delegation from UAE, comprising of experts in the field of countering violent extremism, with their Indian counterparts.

On the defence front, a MoU on defence corporation was signed to allow for studies, research and collaboration between public and private sectors institutions in areas of armaments, defence industries and transfer of technology.

Two agreements on maritime transport were also exchanged which was an expansion of the defence and security cooperation.