Modi’s visit to Abu Dhabi deepens UAE-India trade ties

ANI via Reuters Connect

• UAE-India Cepa reviewed
• Agreement on trade corridor
• Bilateral investment deal

Top-level talks between the UAE and India have taken place in Abu Dhabi, on the back of a deal to strengthen their ties and a 16 percent rise in bilateral trade.

Sheikh Mohamed bin Zayed Al Nahyan, the president of the UAE, and Narendra Modi, India’s prime minister, met on Tuesday to review progress since the signing of the comprehensive economic partnership agreement (Cepa) between the countries in 2022.

After their meeting, the Indian foreign ministry said the countries had reached agreement on a trade corridor that aims to connect Europe with India through parts of the Middle East by sea and rail.

The plan was unveiled last September on the sidelines of the G20 summit in New Delhi.

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The two nations also signed a bilateral investment agreement this week. The UAE is India’s fourth-largest source of foreign direct investments, valued at $3.5 billion. The 16 percent rise in bilateral trade, for the year to March 2023, takes the total to nearly $85 billion.

Data centre projects

Other agreements signed in Abu Dhabi include a memorandum of understanding on digital infrastructure, with a focus on data centre projects in India.

The countries will explore the investment potential of data centres with an initial capacity of up to 2 gigawatts. 

India has 151 data centres and its digital economy is forecast to reach $1 trillion by 2030, up from $175 billion in 2022, according to the UAE’s Ministry of Investment.

Mohamed Hassan Alsuwaidi, the UAE’s minister of investment, said the deal reflected a shared vision to “leverage technology for driving innovation, economic growth and societal development”.

He added that the investment treaty signed this week would create “new economic and investment paths” for Emirati companies in India.

According to the latest quarterly survey by the Dubai Chambers, India is the most popular destination for international expansion after GCC countries.

Reuters/ UAE Presidential Court/Mohamed Al Hammadi

Non-oil trade

Dr Thani bin Ahmed Al Zeyoudi, the UAE’s minister of state for foreign trade, said on Tuesday that non-oil bilateral trade had increased by 2.5 percent in the 17 months following the Cepa, compared to the corresponding period of 2021/22.

Non-oil trade exceeded $38 billion in the first nine months of 2023, a similar figure to the same period in 2022, he added. 

Al Zeyoudi said UAE exports in gold, jewellery, plastics, cement, petroleum oils and dates had recorded “significant growth” following the removal of tariffs in the Cepa.

More than 7 percent of India’s imports come from the UAE, which now ranks second globally after China. India also exports nearly 7 percent of its total exports to the UAE, which ranks second after the United States. 

Suhail bin Mohammed Al Mazrouei, the UAE’s minister of energy and infrastructure, said Indian companies are among the largest investors in the oil and gas sector in the UAE.

The UAE is the fifth-largest supplier of crude oil to India, accounting for 8 percent.

The International Monetary Fund forecasts the Indian economy will surpass the $4 trillion mark for the first time this year and predicts it will become the third largest in the world by 2030.

This was Modi’s seventh visit to the UAE since he became prime minister in 2014. It included a gathering of supporters at an Abu Dhabi stadium as he campaigns for re-election.

Ahead of his arrival, the central Indian state of Maharashtra announced plans to develop a food security corridor with the UAE. The government of Maharashtra, which has 11 million farmers, has linked up with US fund manager Pegasus Capital Advisors for the project.