The new Indian foreign policy delivers real results. A bilateral task force is negotiating a joint fund between India and UAE aimed at the development of new infrastructures. The bilateral fund is attempting to meet the huge infrastructure needs of India, e.g., ports, airports, roads, and the growing demand for buildings generated by the ever expanding process of urbanization. The majority of the Indian population still lives in rural areas and in the coming years it is expected that a large share of the people will move to the cities, generating a demand for primary housing; water networks, power grids and telecommunication networks, etc. The Indian growth is reaching rates of around 7.5% per year, it has been slowed by the poor- rate of improving the infrastructures, e.g., (ports and airports) that prevent the country from being competitive with China.
Prime Minister Narendra Modi visited the UAE on the 16th of August 2015 at the invitation of Prince Mohamed Bin Zayed AI Nahyan. This was the first visit to the UAE by an Indian prime minister in 34- years.The relations between India and the UAE are turning into a strategic partnership that will provide help to counter the onset of any problems dealing with: religious ideologies, radical groups, combating terrorism, improving cyber-security and maritime safety. It is establishing a solid partnership in energy, higher education, innovation, technological research and IT start-up that India has world-class expertise in. Moreover, the partnership lays the foundation of the UAE-India Infrastructure Investment Fund. The next visit will be by Prince Mohamed Bin Zayed AL Nahyan on the occasion of Indian Republic Day in January 2017, during which he is invited as chief guest to finalize the relationship between the two countries. Except for Abdullah Bin Abdulaziz Al Saud, King of Saudi Arabia’s visit in 2006, Prince Mohamed Bin Zayed AI Nahyan is one of the most prominent Arab heads of state.
This demonstrates strong friendship and long standing historical and cultural relationships between the two countries. If we consider the slowing down of the global growth as claimed by the IMF report and the resurgence of protectionism among countries ( WTO report), the Indian economy is expanding at a rather fast rate (estimated 7.6% for 2016 and 7.7% for 2017) that is forecast to be maintained over the next few years.
The fast growing economy will be aided by the development fund which will evolve into about 75 billion dollars. The Asian infrastructure bank, supported by China, has a budget of 100 billion.
Therefore the investment fund, put in place by India and the UAE, appears to be very relevant. This is perhaps a sign that India has found a reliable partner in terms of financial and professional power, and of historical and cultural affinity. India wants to go ahead according to its own strategic plan in the development of infrastructure projects, differentiating itself from China. This situation gives hope for the economic future, industry and technology of India. The United Arab Emirates find a large market in which to make profitable investments and where they can secure a long standing association with the Indian Giant .
Analysts, who predicted a nationalistic scenario, and an hostile Indian attitude toward the Muslim world, will be forced to change their minds. Even though the Pakistani problem is not resolved and is likely to worsen.
India enjoys a good reputation in the Gulf countries, as well as in Iran, and being able to communicate with these countries, that are close geographically and culturally; this is important for India’s future. India is the third largest Muslim country in the world and in the next few years will become the second if not the first, perhaps surpassing Indonesia. The Indian community in the Gulf countries is large, the economic interests of Indian business groups are important: jewelry, retailing, information technology, oil, film industry, healthcare and pharmaceuticals.
Dubai, due to the infrastructure of international level, provides a platform from which Indian multinationals can move towards the African countries, North Africa and the Mediterranean basin.
The Gulf countries, constitute the main trade area of India. While the trade balance with China shows a heavy deficit, instead the trade interchange with this regional area in certain case shows a surplus, for example with the Emirates . Over the last few years these markets have had a slower growth rate due to the fall in oil prices, however, they remain a fundamental platform for Indian multinational companies that are eager to reach new countries.
The beginning of the infrastructure fund managed by India and the Emirates proves the willingness of the two countries to go beyond the cooperation that involves only security and defense issues and instead establish an economic cooperation aimed at supporting the development of the two economies, pursuing sustainable models of economic and social growth.
In this perspective, the cooperation between India and the UAE is an important message, especially in relation to the South Asian context in which tensions are becoming worse.
- Alberto Cossu is associated research of the «Infrastructures and Land Development» Programme (IsAG).