Indian Economy News

India, UAE to form joint working group to strengthen economic ties

New Delhi: India and the United Arab Emirates (UAE) will set up a joint working group to forge stronger linkages in the hydrocarbon, chemicals and fertilizer sectors, a foreign ministry official said on Thursday.

India is also looking at resuming free trade agreement (FTA) talks with the six-nation Gulf Cooperation Council (GCC) of which the UAE is a member. The talks have been stalled for five years and the UAE has indicated that this would be a good time to restart the negotiations, Anil Wadhwa, secretary east in the foreign ministry, said at a media briefing.

The discussions to flesh out objectives listed out in the joint statement issued during Prime Minister Narendra Modi’s visit to the UAE in August took place in New Delhi on Thursday under the aegis of the India-UAE joint commission meeting.

The meeting was co-chaired by UAE’s foreign minister Sheikh Abdullah Bin Zayed Al Nahyan and foreign minister Sushma Swaraj. Modi’s August visit to the UAE was the first by an Indian prime minister in 34 years.

The GCC comprises Saudi Arabia, Kuwait, the UAE, Qatar, Bahrain, and Oman. It was established in Riyadh, Saudia Arabia, in May 1981.

Commerce minister Nirmala Sitharaman will be visiting the UAE in October to chair a high-level task force set up to boost trade ties between the two countries as well as look at issues that impede UAE investments into India, Wadhwa said.

Sitharaman’s visit will be followed up soon after by a visit to New Delhi by her UAE counterpart in a bid to maintain the momentum imparted to bilateral ties by the visit to the Gulf Emirate last month by Modi.

“We agreed to work to our strengths to ensure that bilateral trade bottlenecks are removed,” Wadhwa said, noting that in 2012-13 bilateral trade amounted to $75 billion but had fallen to $60 billion in 2014-15. “We have to look at new areas where we can take this trade cooperation further,” he said, adding that the aim was to increase trade by 60% in the next five years—a target set by India and the UAE during Modi’s visit—Wadhwa said.

“We have a window of opportunity to open up our negotiations for a free trade agreement with the GCC on a proposed free trade agreement ... we were assured by the UAE side that this would be a favourable time to renew our interest,” he said.

India-UAE relations were injected with a new energy during Modi’s three-day visit to the Emirate last month. The UAE was one of only three countries to recognize the Taliban in Afghanistan besides Pakistan and Saudi Arabia. An Indian Airlines aircraft hijacked by Islamist militants from Nepal was flown to the UAE and finally landed in Taliban-controlled Afghanistan in December 1999.

Ties have turned a page, with India and the UAE now seeing eye to eye on terorrism and security issues. That the joint commission meeting is taking place within a month of Modi’s visit and more visits were lined up in the future weeks was indicative of the traction ties have gained since Modi’s UAE visit.

On Thursday, India and the UAE agreed to strengthen ties in the IT, develop manufacturing of IT and hardware to boost UAE investments in India including through the newly created India-UAE Infrastructure Fund of the tune of $75 billion dollars, Wadhwa said.

India wants the expediting of a universal banking licence for the State Bank of India to begin operations in the UAE, he said.

On the energy front, India “is looking for long-term contracts. We have sought an increased term allocation of liquified petroleum gas in 2015 for India’s oil companies. We also discussed investment opprtunities for Indian companies in various upstream and downstream projects in the UAE and also third countries. The UAE has expressed interest in participation in building up India’s strategic petroleum reserves,” Wadhwa said. Indian energy companies were keen to participate in the redevelopement of brownfield projects in the UAE, he added.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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