To strengthen global connectivity and trade, India has signed two significant agreements with the United Arab Emirates (UAE). A business event was organized in Mumbai on 10th September 2024. In this event, Abu Dhabi Crown Prince Sheikh Khaled Bin Mohamed Bin Zayed Al Nahyan, PM Narendra Modi, Indian Ministry of Commerce and Industry Piyush Goyal, senior Indian Government officials, UAE Government Officials and many others attended the business event.
Global connectivity and trade agreements between India and the UAE
A significant step has been taken by India and the UAE to increase global connectivity and trade through a Virtual Trade Corridor (VTC). This agreement of India-UAE aims to optimize the logistics system and strengthen bilateral trade.
The VTC will digitalize several logistical and administrative aspects of global connectivity and trade to reduce time, effort and costs. Successful implementation of the VTC will ensure more efficient trade routes, and quicker processing time and reduce overall trading costs between India and UAE.
The VTC will be an integral part of the India-Middle East-Europe Economic Corridor (IMEC). The official statement highlights, “Launch of work on the India-UAE virtual trade corridor (VTC) and MAITRI interface to facilitate VTC under the framework agreement between India and UAE on the India-Middle East-Europe Economic Corridor (IMEEC).”
To streamline the VTC through technology India and the UAE have also integrated the Master Application for International Trade and Regulatory Interface (MAITRI). MAITRI will include various Indian operational portals and will allow to seamless interface of the trade and regulatory system of the UAE.
With the help of MAITRI, a transparent and smother trade transaction will be happen between these two countries. Being a part of the IMEC framework, MAITRI will be a unified, secure and scalable platform that will ensure efficient cross-border trade operations to strengthen economic ties between the India and the UAE.
Collaboration on Critical Minerals supply
Another significant agreement Memorandum of Understanding (MoU) was also signed between International Resource Holding RSC LTD and a consortium of Indian energy firms including Khanji Bidesh India Ltd, ONGC India Ltd and Oil India Ltd.
The official statement mentions, “The MoU provides for cooperation in critical mineral exploration in third countries. It will help boost the supply chain resilience of critical minerals.” To enhance the Critical Mineral Supply Chain to power the digital economy in the 21st century, the MoU is important.
Lithium, cobalt, graphite, nickel and many more come under critical minerals that have been used to digitalize an economy. The global economy system is heavily shifting towards digitalization, and using critical minerals in manufacturing several technologies starting from smartphones to electric vehicles. The MoU will help India and the UAE enhance their supply chain resilience by ensuring fast growth of ongoing technological and economic boosts.
IMEC Framework
During the G20 Summit in New Delhi on September 2023, the IMEC framework was signed for economic and geopolitical ramifications for India. The core aim of IMEC was to boost economic growth through enhanced connectivity and economic integration among Asia, Europe and the Arabian Gulf.
Two remarkable corridors were comprised in the IMEC including the Eastern Corridor and the Northern Corridor. The IMEC is important for manufacturing improvement, ensuring food security and optimizing the supply chain.
However, in February 2024, India and the UAE took the lead in the IMEC project by signing the Inter-Governmental Framework Agreement during the visit to Abu Dhabi of Indian PM Narendra Modi. The latest agreement of VTC and MoU is also built upon the IMEC framework to boost the economic ties of both countries.
Strong trade bond between India and the UAE
Over several decades India and the UAE have shared a trading partnership. However, during the post-1990s economic relations between these two countries strengthened when India exported several gems, machinery, minerals, equipment, chemicals and jewellery to the UAE.
India is the second-largest trading partner of the UAE. It holds 9% of total foreign trade and 14% of non-oil exports of UAE. Whereas, UAE is the third largest trading partner of India after China and the US.
The trade between India and the UAE increased from $180 million/year in the 1970s to $84.84 billion/year in the year 2023. It is estimated the UAE’s non-oil trade with India will boost to $100 billion in the upcoming five years.
Moreover, the UAE become the home of 3.5 million Indians. India is also getting financial support from the UAE for the energy transition programme. This programme aims to generate 500 GW of renewable energy by 2030. The bilateral trade between India and the UAE is estimated to reach $250 billion by 2030.
The UAE has become the top six Foreign Direct Investment (FDI) sources in India. Between the fiscal year 2000 and 2023, $18.5 billion has been invested in the form of FDI by UAE in India. Whereas the substantial investment of the UAE in India was around $20-$21 billion.
The UAE has also made a significant investment of $75 billion for the infrastructure development of India. This long-term strategic investment planning of UAE might help India to gain significant growth in the infrastructure sector.
FAQ
What is the VTC between India and UAE?
A significant step has been taken by India and the UAE to increase global connectivity and trade through a Virtual Trade Corridor (VTC). This agreement of India-UAE aims to optimize the logistics system and strengthen bilateral trade.
Who is the third largest trader in India?
The UAE is the third largest trading partner of India after China and the US.
How much trade value do India and UAE share?
The trade between India and the UAE increased from $180 million/year in the 1970s to $84.84 billion/year in the year 2023.
How many Indians live in the UAE?
The UAE become the home of 3.5 million Indians.
What is IMEC?
During the G20 Summit in New Delhi on September 2023, the IMEC framework was signed for economic and geopolitical ramifications for India. The core aim of IMEC was to boost economic growth through enhanced connectivity and economic integration among Asia, Europe and the Arabian Gulf.
What is MAITRI?
To streamline the VTC through technology India and the UAE have also integrated the Master Application for International Trade and Regulatory Interface (MAITRI). MAITRI will include various Indian operational portals and will allow to seamless interface of the trade and regulatory system of the UAE.
What is the MoU agreement between the UAE and India?
Another significant agreement Memorandum of Understanding (MoU) was also signed between International Resource Holding RSC LTD and a consortium of Indian energy firms including Khanji Bidesh India Ltd, ONGC India Ltd and Oil India Ltd. The MoU will help India and the UAE enhance their supply chain resilience by ensuring fast growth of ongoing technological and economic boosts.
