India, UAE sign clutch of pacts to boost strategic, economic ties
The investment pact is aimed at attracting the UAE's sovereign wealth funds into the infrastructure sector
New Delhi: India and the United Arab Emirates (UAE) on Thursday signed a clutch of pacts to boost their strategic and economic ties, including one on concluding a mechanism to allow UAE institutional investors to put money into India’s cash-starved infrastructure and another for rupee-dirham currency swaps.
The pacts were signed and exchanged in New Delhi in the presence of Prime Minister Narendra Modi and visiting Crown Prince Sheikh Mohamed bin Zayed Al Nahyan of Abu Dhabi, who is also deputy supreme commander of the UAE armed forces.
The investment pact is aimed at attracting the UAE’s sovereign wealth funds into the infrastructure sector. The UAE controls the second largest sovereign wealth fund in the world—the Abu Dhabi Investment Authority with around $800 billion under its management.
There were no details of the exact mechanism being negotiated between India and the UAE for channelling the investments or the currency swap agreement.
But Anwar Gargash, deputy foreign minister of the UAE, told reporters earlier on Thursday that the UAE was interested in investing in India’s infrastructure sector and “we are currently discussing with the Indian government the vehicle to make that investment".
Currently, the UAE’s investment in India is about $10 billion dollars, he said, adding that “India is a huge economy and you know, India can absorb multiple numbers of investments into the economy... We understand the economy itself is vibrant, dynamic and large enough for it to take our money and other people’s money. But it is also important that we see structural reforms...
“What we would like to see is a more attractive climate to absorb the investment. The commitment (from the UAE) is there; we are also waiting for the Indian party to find the right channel for us to make that commitment in these investments," Gargash said.
“As much as you say India is seeking our funds, we are seeking India’s market as well. It’s a win-win situation," he added.
According to an Indian government official, India has agreed to the UAE’s demand to have its representative on the board of the newly created National Investment and Infrastructure Fund (NIIF), aimed at increasing infrastructure financing in the country.
In December, the government announced steps to set up NIIF and budgeted a contribution of ₹ 20,000 crore for the fund in fiscal 2016 while another ₹ 20,000 crore is expected to be raised from sovereign wealth funds.
Prime Minister Modi, during a visit to the UAE in August—the first by an Indian prime minister in 34 years—had urged the host nation to invest in India’s infrastructure sector, pointing out that Asia’s third largest economy had the potential to absorb as much as $1 trillion in investments in the sector.
During Modi’s visit, it was also decided to encourage investment institutions in the UAE to raise investments for the infrastructure sector in India with the target of reaching $75 billion, Anil Wadhwa, secretary, east, in the Indian foreign ministry, said earlier this week. “So the UAE has been invited to participate in the NIIF in India," he said.
Besides the infrastructure investment and the currency swap agreements, other pacts signed included one on space cooperation under which India is expected to help the UAE in its Mars probe mission, an agreement on cooperation in renewable energy; combating cyber crime; and skill development. In all, the two sides initialled nine pacts.
According to Gargash, the visit of the Abu Dhabi crown prince, which is taking place within six months of Modi’s visit, was aimed at maintaining the new impetus given to bilateral relations by Modi’s visit.
Describing the Modi visit as “a strategic break" from the past, Gargash said the UAE viewed its relationship with India on its own merit and not through the prism of Pakistan or Iran.
“India is important in itself. India for us is not in relation to Iran or in relation to Pakistan. We want an excellent multifaceted growing transparent relationship with India because India is important in itself for us ... it is really about India and it is about the UAE," the visiting minister said.
The UAE is seen as close to India’s arch rival Pakistan and opposed to Shia majority Iran with whom India is trying to refashion ties now that some sanctions imposed on Iran for its suspect nuclear programme have ended.
“At the political level, (in the past) we have heard about each other through other channels now we are talking to each other....I think this is an important part of the relationship. I think this is an essential change (from the past)," Gargash said.
On Friday, Sheikh Mohamed bin Zayed will be travelling to Mumbai, where he will meet representatives of Indian industry.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!