10th September 2024 (12 Topics)

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India and UAE Sign Major Agreements to Boost Strategic Ties

Context

India and the United Arab Emirates inked four major pacts that will facilitate crude oil storage, long-term supply of LNG and cooperation in the civil nuclear energy sector as Prime Minister Narendra Modi held wide-ranging talks with Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin Zayed Al Nahyan focusing on boosting overall strategic ties.

Breakdown of the key deals

India and the United Arab Emirates (UAE) have recently signed four significant agreements to strengthen their strategic partnership. Here’s a breakdown of the key deals:

Long-Term LNG Supply Agreement: Abu Dhabi National Oil Company (ADNOC) will supply 1 million metric tonnes of liquefied natural gas (LNG) annually to Indian Oil Corporation Ltd (IOCL).
- Context: This is the third such LNG contract signed in over a year, with IOCL and GAIL previously securing similar agreements for 1.2 million metric tonnes per annum (MMTPA) and 0.5 MMTPA, respectively.
Crude Oil Storage and Management: ADNOC and India Strategic Petroleum Reserve Ltd (ISPRL) have signed a Memorandum of Understanding (MoU) to explore additional opportunities for crude oil storage in India. This includes renewing their existing storage agreement.
- Background: ADNOC has been storing crude in ISPRL’s Mangalore cavern since 2018, with a total of 5.86 million barrels stored. This helps India manage energy security during global supply disruptions.
Civil Nuclear Energy Cooperation: Emirates Nuclear Energy Company (ENEC) and Nuclear Power Corporation of India Ltd (NPCIL) have agreed to enhance cooperation in nuclear power. This includes operating and maintaining nuclear plants, sourcing nuclear materials from India, and exploring investment opportunities.
- This agreement builds on recent advancements, such as the completion of the Arab world’s first nuclear power plant in Abu Dhabi, which will generate 40 terawatt-hours of electricity annually once fully operational.
Production Concession Agreement: A concession agreement for Abu Dhabi Onshore Block 1 was signed between ADNOC and Urja Bharat, a joint venture of Indian Oil Corporation Ltd (IOCL) and Bharat Petro Resources Ltd. This allows Urja Bharat to bring crude oil to India, supporting the country’s energy security.
- This is the first such agreement involving an Indian company operating in the UAE.
Food Park Development: A Memorandum of Understanding (MoU) between the Gujarat government and Abu Dhabi Developmental Holding Company (ADQ) will set up a food and agriculture park in Gundanpara, Ahmedabad. The project is expected to start by the second quarter of 2025.

Bilateral Relations:

The strategic partnership between India and the UAE has significantly strengthened in recent years.
Following Prime Minister Narendra Modi’s visit to the UAE in August 2015, the countries upgraded their relationship to a Comprehensive Strategic Partnership in 2022.
- Eyeing bilateral trade of $100 billion in the next five years, CEPA brings cuts in tariff, fast-tracked approvals for business, access to trade zones etc.
Both countries signed a Local Currency Settlement (LCS) System in July 2023 to promote the use of Indian Rupee and AED (United Arab Emirates Dirham) for cross-border transactions.
While UAE is India’s second top export destination after the US, India is UAE’s second largest trading partner after China.
Trade between India and the UAE touched historic highs going from $72.9 billion in FY22 to $84.5 billion in FY23.
About 3.5 million strong and vibrant Indian community forms the largest expatriate group in the UAE.
- The Indian expatriate community in the UAE, numbering about 3.5 million, is the largest foreign community in the country.
The UAE and other GCC nations are major contributors to India’s foreign remittance inflow and the use of local currencies in cross-border transactions will further increase this.
Both countries are also currently part of several plurilateral platforms such as BRICS, I2U2 (India-Israel-UAEUSA) and UFI (UAE-France-India) Trilateral, etc.

Strategic partnerships vs comprehensive strategic partnership

The major fields of strategic partnerships usually include economy, defence, energy security, intelligence and foreign policy cooperation, science and innovation, and technology cooperation.
A comprehensive strategic partnership is seen as a level higher, with more broad-ranging engagement in the same, if not more, fields. Bilateral ties are viewed as significantly deepened with a comprehensive strategic partnership.

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GS Analyst: Daily Current Affairs

10th September 2024 (12 Topics)

Copy

India and UAE Sign Major Agreements to Boost Strategic Ties

Breakdown of the key deals

Bilateral Relations:

Strategic partnerships vs comprehensive strategic partnership

Still Have Questions?

GS Analyst: Daily Current Affairs

India and UAE Sign Major Agreements to Boost Strategic Ties

Breakdown of the key deals

Bilateral Relations:

Strategic partnerships vs comprehensive strategic partnership

Still Have Questions?

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