India and the UAE did not appear to have prepared well to give a qualitative push to their bilateral relationship despite good intentions of the leaders of the two countries. The Crown Prince Sheikh Mohammed Bin Zayed Al Nahyan was the Chief Guest at this year’s Republic Day celebrations, which is a departure from the tradition of inviting only heads of states/ governments, indicating the importance that New Delhi attached to the visit to upgrade the relations to that of its other strategic partners. Prime Minister Narendra Modi’s visit to UAE in 2015 and the reciprocal trip by the Crown Prince to India the next year clearly set out targets for this Comprehensive Strategic Partnership.
The $ 75 billion UAE-India Infrastructure Investment Fund was envisioned to be the core of such Partnership, which was expected to increase the bilateral trade by 60 percent over the next few years. This was agreed during the Modi’s visit and a series of follow up meetings were held to convert it into a reality. Highway development, maritime transport, and even defence industry are some of the key areas identified for investments from the Emirates. No such agreement was signed.
Apparently, there was delay in preparing an initial draft agreement on the mechanism to administer such a fund. The draft would have to undergo several stages of scrutiny before the two sides can sign it. So much so, there is no mention of it either in the joint statement or the list of general MOUs signed during the visit. There may be several additional questions from the UAE side on other issues unrelated to the Fund mechanism like projected decline in the Indian economic growth rate, demonetization, proposed economic reforms including implementation of the GST. More work is needed to convince the Emirates on the wisdom of investing in India.
The two sides need to quickly go back to the drawing board and speed up to finalize the draft agreement for operationalization of the Fund.