The UAE has committed a $5 billion (Rs41,700 crore) investment umbrella into India’s infrastructure, banking and financial sectors. This was firmed up when Prime Minister Narendra Modi met President Sheikh Mohamed bin Zayed Al Nahyan of the UAE in Dubai recently. In addition, the two countries have signed six agreements (including energy, defence, and maritime) to advance their Comprehensive Strategic Partnership.
This economic push comes as India and the UAE target a bilateral trade volume of $200 billion, which will enable the UAE to become one of India’s most critical allies for digital infrastructure, maritime capability and alternative energy reserves. The UAE is planning to store up to 30 million barrels of crude oil in India’s Strategic Petroleum Reserve, which will further secure India’s energy needs. “Under this agreement, the oil will remain with the UAE, which will bear the cost of storage, while India will get the first access in case of an emergency,” says Vikram Misri, foreign secretary, India. “Overall, this will strengthen India’s energy security without imposing any additional financial burden on India.”
“A strategic collaboration agreement between Indian Strategic Petroleum Reserves Limited (ISPRL) and Abu Dhabi National Oil Co (ADNOC) has been signed, which will mean improved energy security for India that would enhance India’s strategic petroleum reserves,” adds Randhir Jaiswal, spokesperson, ministry for external affairs (MEA). “There could be a collaboration in liquefied natural gas (LNG) and liquefied petroleum gas (LPG) storage facilities in India too.”
Energy partner
The UAE is a critical energy partner for India, supplying close to 11 per cent of its crude requirement (fourth largest source) and over 40 per cent of its LPG. Earlier this year, in January, India signed a 10-year agreement to secure a $3 billion LNG deal with the UAE. The agreement was between ADNOC and Hindustan Petroleum Corporation Limited (HPCL) to secure the supply of 0.5 million tonnes per annum (mtpa) of LNG from 2028 onwards.
“India stands shoulder to shoulder with the UAE in every crisis and will continue to do so,” assures Prime Minister Modi. “India has always given importance to dialogue and diplomacy for resolving issues, and it is important that the Strait of Hormuz remains free and open”.
Pacts have also been signed on defence co-operation. And PM Modi has condemned the attacks on the UAE, saying that they were ‘not acceptable in any form’. The UAE is a second home, and we welcome steps taken by the UAE to uphold national unity, security and regional integrity, he affirmed.
The two nations have also worked on a framework for a ‘strategic defence partnership’, which will lead to defence industrial collaboration, innovation and sharing of technology and strengthen national and regional security. “India and the UAE will also set up a ship repair cluster in Vadinar,” adds Jaiswal. “This would boost shipping, port and coastal infrastructure and will advance ‘Made in India’”.
A pact has also been signed on skill development in ship repair, which would advance the capabilities of the Indian maritime workforce and would position India as a hub for skilled shipbuilding and ship repair professionals and boost the Skill India mission. Another pact signed relates to setting up an eight Exaflop Super Computer cluster as a partnership between C-DAC (India) and G-42 of the UAE, which would advance the supercomputer cluster.
The $5 billion investment commitment from the UAE will create stronger markets and more jobs and underscore the UAE’s sustained commitment to India’s development and growth story, adds the MEA spokesperson.
How it goes
• $3 billion in banking (Emirates NBD & RBL Bank): Emirates NBD (the UAE’s largest lender) is acquiring a controlling stake of 60-74 per cent in India’s RBL Bank, representing the largest-ever foreign direct investment (FDI) in the Indian banking sector.
• $1 billion in core infrastructure (ADIA & NIIF): The Abu Dhabi Investment Authority (ADIA) is deploying capital into the National Investment and Infrastructure Fund (NIIF) to bankroll priority domestic infrastructure projects.
• $1 billion in housing credit (IHC & Sammaan Capital): The Abu Dhabi-based International Holding Co (IHC) is acquiring a 41-43 per cent promoter-level stake in Sammaan Capital to tap into India’s rapidly growing retail mortgage and affordable housing sectors.