Indian prime minister returns to Abu Dhabi two-and-a-half years after agreement on $75bn fund was reached
Infrastructure investment tops Modi's agenda for UAE visit next month
Indian prime minister Narendra Modi’s visit to the UAE next month will be focused on speeding up investment in India's infrastructure, increasing trade and improving energy and security ties.
Mr Modi's visit has yet to be confirmed by India, but UAE officials have said he will address the World Government Summit being held in Dubai from February 11-13, where India is the guest of honour this year.
The prime minister's visit will be part of a regional tour that includes Oman and Palestine, Indian officials told The National. He is expected to be in the UAE on February 11 and 12 and visit Abu Dhabi and Dubai, although details of his itinerary are still being worked out.
Rajeev Sharma, a commentator on global strategic affairs, said the top item on Mr Modi's agenda would be to follow up on the UAE's pledge to invest US$75 billion (Dh275bn) in India, which was made two-and-a-half years ago during the prime minister's last visit to Abu Dhabi. Although one deal worth $1bn was announced late last year, it is not clear whether the amount has been transferred to India.
“Nothing concrete has been achieved on this front yet. The Modi government needs this fund at the soonest possible for its own domestic political reasons. With elections due in 2019, if the $75bn UAE investment were to materialise quickly, it would demonstrate to the electorate the Hindu nationalist government’s credibility in the international community, particularly as it would be coming from a Muslim nation like the UAE,” Mr Sharma said.
Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, has made two state visits to India during Mr Modi's tenure, including in January last year when he was chief guest at Republic Day celebrations in New Delhi.
Mr Modi and Sheikh Mohammed have established a personal rapport and share a vision for a huge jump in economic co-operation, but their countries' failure to achieve this is a result of several factors, said Prasad Nallapati, president of the Centre for Asia-Africa Policy Research.
"The Middle East has been in turmoil, particularly since Donald Trump took over as president of the United States in January last year," Mr Nallapati said. "Iran’s growing arc of influence from Iraq to Lebanon has been a major headache for Saudi Arabia and the UAE. The two countries formed a military alliance to fight the Iran-backed Houthi rebel group in Yemen. Qatar became a new enemy, effectively demolishing the Gulf Cooperation Council. The US decision to recognise Jerusalem as the capital of Israel and move its embassy there from Tel Aviv created further complications in the region.”
India has had its own downsides, he said. The Modi government's economic reforms such as demonetisation — the sudden withdrawal of large denomination banknotes from circulation in December 2016 — and introduction of a nationwide goods and services tax have slowed down India's $2.4 trillion economy.
However, recent developments have improved the country's outlook.
“The Indian economy is estimated by the International Monetary Fund to grow at 7.5 per cent this year. Moody’s has upgraded India’s rating to Baa2, the country’s first upgrade since 2004. Prime minister Modi’s visit to the UAE is, therefore, very timely as he will be able to project India’s positive momentum toward higher economic performance this year and in the years ahead," Mr Nallapati said.
Together with recent state election victories demonstrating Mr Modi's political dominance, "this must convince the UAE to plunge into greater economic co-operation with India and begin its much promised investments in the country,” he said.
During Sheikh Mohammed’s New Delhi visit last year, the UAE and India pledged to expand bilateral trade by 60 per cent over five years.
The two leaders also reviewed progress toward realising the $75bn target for UAE investment in India’s infrastructure development.
In October, a wholly owned subsidiary of the Abu Dhabi Investment Authority (Adia) signed an agreement with India’s National Investment and Infrastructure Fund to invest $1bn in India.
India and the UAE are among each other’s top trading partners, with annual bilateral trade of around $50bn in 2015 and 2016. The UAE is one of biggest sources of foreign direct investment in India and contributes significantly to its energy security. It was the fifth-largest supplier of crude oil to India in 2015 and 2016. The latest industry estimates project an increase in bilateral trade that outstrips the official target, with direct and indirect trade touching $100bn by 2020.
Indians also make up the UAE's largest expatriate community, with an estimated 2.6 million citizens in the country.
More than 50,000 Indians turned up to hear Mr Modi speak at the Dubai International Cricket Stadium in August 2015, but it is not yet clear whether such an event is planned during his upcoming visit.