UAE boosts India's energy security

A new energy and purpose is visible in the India-United Arab Emirates (UAE) bilateral relationship. Barely six months after Prime Minister Narendra Modi’s historic visit to the UAE – he is the first Indian premier to visit the country since Indira Gandhi did so in 1981 – Shaikh Mohammad Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE’s armed forces came to India to further consolidate the bilateral partnership. The two sides signed a string of agreements in the fields of cyber security, space, infrastructure investment, cultural exchange and renewable energy. A landmark deal sealed during the Crown Prince’s visit will see the UAE’s national oil company Abu Dhabi National Oil Company store crude oil in India’s strategic storage facilities. It has agreed to give two-thirds of this oil free to India. In addition to proving India-UAE relations with a shot in the arm, this will boost India’s energy security. The storage of crude, which is expected to be adequate to meet our oil requirement for 10 days, will enable India to hedge against volatility in global crude oil prices.


The UAE is India’s third largest trade partner; in 2014-15 this trade was worth $60 billion, a giant leap from trade in the 1970s valued at around $180 million. Oil accounts for the bulk of this trade and the UAE provides 8 per cent of India’s oil imports. While bilateral relations have been robust for decades, there are several issues of concern. One is that booming trade relies heavily on India’s import of oil from the UAE. Both sides are seeking to diversify the trade basket. They appear to be making some progress in this direction given their increasing interest to work together in information technology, space etc. With regard to investment, the two sides have signed a Memorandum of Understanding to set up a bilateral Infrastructure Investment Fund of $75 billion, which will oversee the UAE investment in India’s infrastructure.

It is with regard to counter-terrorism cooperation that India-UAE relations have witnessed the most dramatic change in recent times. Last year, the UAE, which is known to be pro-Pakistan on terrorism issues, agreed to counter-terrorism cooperation with India. The rising threat of the Islamic State is likely to have triggered a rethink in the UAE on the question of its long-standing support to religious extremism and terrorism. This presents India with an enormous opportunity to win the strategic support of a key trade partner in the Persian Gulf.

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