By MOHD AMMAR ZIKRY

Introduction

India and the United Arab Emirates (UAE) have established a rich and evolving bilateral trade relationship. From a humble beginning with an annual exchange of US$180 million in the 1970s to a robust partnership today, this relationship has exhibited remarkable resilience and strategic importance. This paper will explore this partnership’s origins, growth, challenges, and prospects, demonstrating the significance of its shared strategic vision in driving the future of its trade relations.

Historical Background and Evolution

The trading relationship between India and the UAE can be traced back several centuries when traders voyaged across the Arabian Sea to exchange goods. It took a formal turn in the 1970s with an annual trade volume of US$180 million. The relationship evolved progressively over the decades, with the UAE emerging as India’s largest trading partner in the fiscal year 2012-13. Given the UAE’s small population, this attests to its strategic location and economic policies. This association was based on economics and fortified by cultural and personal ties.

The trade relationship between India and the UAE has a deep historical origin, dating back centuries when traders would sail across the Arabian Sea to exchange goods. This relationship took a more formal and strategic turn in the 1970s. The trade volume was relatively modest during this period, amounting to US$180 million annually.

In the following years, the relationship between the two countries grew more vigorous, with the UAE becoming one of India’s top three exporting nations. By the fiscal year 2012-13, the UAE had become India’s largest trading partner, a significant achievement considering the UAE’s small population size.

The growth of bilateral trade relations has been systematic and strategic, strengthening the countries’ economic, commercial, and strategic partnerships. This strategic relationship has also been complemented by strong cultural and people-to-people ties, with a sizeable Indian diaspora residing in the UAE. Overall, the evolution of India-UAE trade relations is a testament to both nations’ mutual understanding, shared interests, and strategic vision.

Current Patterns and Trends

As of 2021, India-UAE trade increased to US$72.8 billion (IBEF, 2023). The UAE invested more than US$4 billion in India in FY2020 through its sovereign wealth funds, signifying the growing importance of India as an investment destination for the UAE  (Palit, 2022). Defence cooperation also has been steadily growing, reinforcing their comprehensive strategic partnership (Ministry of External Affairs – Government of India, 2020). 

According to a report by KPMG (2022), trade between India and the UAE has increased significantly over the years (see Table 1):

Note. Adapted from “India-UAE bilateral trade and investment report” by KPMG, 2022 (https://kpmg.com/ae/en/home/insights/2022/02/india-uae-bilateral-trade-and-investment-report.html)

The table shows the bilateral trade between India and UAE from 2016 to 2020 regarding exports, imports and total trade. It shows that the trade peaked in 2019 at USD 60 billion but declined in 2020 due to the pandemic. It also shows that India has a trade surplus with UAE, meaning it exports more than it imports from UAE. Nevertheless, the trade volume has grown significantly, from US$180 million in the 1970s to USD 60 billion in 2019, and is expected to reach US$100 billion by 2030. This shows the high potential for business and investment opportunities between the two countries, as they have diversified their trade sectors and expanded their cooperation in various fields.

Challenges and Opportunities

While trade relations have been thriving, both countries face several challenges, including geopolitical factors, regional integration, market access, and regulatory barriers. The need to safeguard critical supply chains and diversify trade partners are factors shaping their Free Trade Agreement (FTA) engagements (Palit, 2022). Nonetheless, these challenges also present opportunities for enhancing cooperation, such as improving regulatory harmonisation, enhancing mutual investments, and strengthening the strategic partnership.

The two countries also signed a Comprehensive Economic Partnership Agreement (CEPA) in February this year, giving market access to 97 per cent of tariff lines accounting for 99 per cent of Indian exports. The CEPA was the first signed by India in the Middle East and North Africa region and by the UAE in any country worldwide.

However, some challenges and opportunities exist in bilateral trade relations between India and the UAE. Some of the challenges include:

• Diversifying the trade basket beyond petroleum products, gems, and jewellery, which account for most trade between India and the UAE (2016-2020). 
• Enhancing connectivity and logistics infrastructure to facilitate trade flows and reduce costs. Addressing non-tariff barriers such as standards, certifications, and regulations that may affect market access. 

Some of the opportunities include: 

• Leveraging the strategic location of the UAE as a gateway to Africa, Europe, and Central Asia for Indian exports. 
• Exploring new sectors of cooperation such as fintech, clean energy and climate action, food security, sustainability, digital payments, cyber security, cryptocurrencies, and advanced technologies. 
• Increasing investment flows in both directions, especially coal, oil and gas, and real estate. 

Future Prospects

As we look ahead, the impact of global market trends, oil prices, and economic policies will continue to shape the future of India-UAE trade relations. The world is gradually shifting towards renewable energy, and the oil demand may decline over the coming decades. This transition presents an opportunity for both countries to invest in and trade renewable energy technologies. The growth of digital economies also offers potential for cooperation in sectors such as e-commerce, fintech, and artificial intelligence. With the right economic policies and a strategic vision, India and the UAE can further navigate these global shifts and strengthen their trade relationship.

Conclusion

The bilateral trade relationship between India and UAE has proven to be dynamic and resilient, persisting through global market trends, fluctuating oil prices, and evolving economic policies. From modest beginnings, this relationship has grown into a partnership of strategic importance for both countries, with trade volumes reflecting the depth of their economic cooperation.

The evolution of India-UAE trade relations is a testament to their mutual understanding, shared interests, and strategic vision. The shared vision of prosperity and strategic collaboration between India and the UAE holds a beacon of promise, guiding their journey as they continue to shape the future of their bilateral trade relations.

(999 WORDS)

REFERENCES

IBEF. (2023). India-UAE Trade. https://www.ibef.org/indian-exports/india-uae-trade

KPMG. (2022). India-UAE Bilateral Trade and Investment Report. Retrieved May 19, 2023, from https://kpmg.com/ae/en/home/insights/2022/02/india-uae-bilateral-trade-and-investment-report.html.

Ministry of External Affairs, Government of India. (2020). Bilateral Brief February 2020. Retrieved May 19, 2023, from https://mea.gov.in/Portal/ForeignRelation/Bilateral_Brief_feb_2020_.pdf.

Palit, A. (2022). India-United Arab Emirates CEPA: New Beginning in India’s Trade Engagement. Retrieved May 19, 2023, from https://www.isas.nus.edu.sg/papers/india-united-arab-emirates-cepa-new-beginning-in-indias-trade-engagement/

By Fito Reyhantara

Introduction
The Silk Road stands as an enduring symbol of the historical ties between the Middle
East and Asia. Spanning over several millennia, this ancient network of trade routes played a
crucial role in connecting civilizations and facilitating the exchange of goods, ideas, and
cultures. The Silk Road was not a single, fixed route, but a complex web of paths that stretched
across vast territories, encompassing diverse landscapes and peoples.
The origins of the Silk Road can be traced back to the Han Dynasty in China around
130 BCE. This period marked the beginning of a significant trade relationship between the
Middle East and Asia, as Chinese silk, renowned for its exquisite quality, became a highly
coveted commodity in the West. The Middle East, with its strategic geographical location,
served as a vital crossroad where the Silk Road intersected with other trade routes, branching
out into Europe, Africa, and the Indian subcontinent.
The Silk Road was more than a mere conduit for commerce; it was a conduit for cultural
and intellectual exchange as well. Along its extensive routes, diverse civilizations interacted,
sharing not only goods but also ideas, technologies, languages, and religious beliefs. Buddhist
missionaries from India, Muslim merchants from the Arabian Peninsula, and European
travelers like Marco Polo all traversed the Silk Road, leaving indelible imprints on the societies
they encountered.
Today, the legacy of the Silk Road continues to resonate. It serves as a reminder of the
historical interconnections between the Middle East and Asia and highlights the power of trade
and cultural exchange in shaping societies. As globalization and interconnectedness define the
contemporary world, understanding the historical context and significance of the Silk Road
becomes even more relevant in fostering cooperation, diplomacy, and mutual understanding
between Middle Eastern and Asian nations.
Body
The term “Silk Road” itself was coined by the German geographer Ferdinand von
Richthofen in the late 19th century. However, it is important to note that the Silk Road was not
a single, unified route but rather a network of interconnected paths that spanned thousands of
kilometers. It stretched from China in the east to the Mediterranean Sea in the west, with
branching routes that extended into Central Asia, the Indian subcontinent, and beyond.
The primary purpose of the Silk Road was to facilitate the trade of valuable
commodities, most notably silk. Chinese silk, renowned for its exquisite craftsmanship and
high quality, became a highly sought-after luxury item in the West. It was lightweight, durable,
and had a high value-to-weight ratio, making it ideal for long-distance trade. However, silk was
just one of the many goods exchanged along the Silk Road. The routes also facilitated the trade
of spices, precious metals, gemstones, ceramics, textiles, tea, horses, and various agricultural
products.

The Middle East played a pivotal role in the Silk Road’s historical trajectory. As a
crucial link between East and West, the Middle East served as a hub of commercial activity and
cultural exchange. Major trade centers such as Palmyra in Syria, Palmyra in Iraq, Baghdad,
Damascus, and Cairo emerged as bustling cosmopolitan cities where goods from distant lands
were bought, sold, and distributed.
The Silk Road played a pivotal role in shaping the economies of both the Middle East
and Asia. It fostered commercial activity, encouraged cultural exchange, and facilitated the
diffusion of ideas and technologies. For the Middle East, the Silk Road brought economic
prosperity as the region became a hub for trade and commerce. Cities along the route, such as
Palmyra in Syria and Palmyra in Iraq, flourished as bustling centers of exchange, showcasing
the region’s rich cultural heritage.
In Asia, the Silk Road stimulated economic growth, linking diverse civilizations and
promoting the spread of knowledge and innovations. Chinese silk, highly sought after in the
West, became a key driver of economic development, establishing China as a dominant player
in global trade. Asian societies, including the Parthians, Sogdians, and Kushans, capitalized on
the economic opportunities provided by the Silk Road, facilitating the flow of goods and ideas
across vast distances.
While the Silk Road as a physical trade route declined over time, its legacy remains
deeply embedded in the cultural and historical fabric of the Middle East and Asia. The exchange
of goods and ideas fostered cross-cultural interactions and left an indelible mark on the
development of art, architecture, language, and cuisine. The spread of religions, such as
Buddhism, Islam, and Christianity, owes much to the Silk Road, as they were carried along its
routes by merchants, pilgrims, and scholars.
The Silk Road also nurtured intellectual and academic exchanges, with scholars and
travelers documenting their observations and experiences. Notable figures like Marco Polo and
Ibn Battuta recorded their journeys along the Silk Road, providing valuable insights into the
societies and cultures they encountered.
Conclusion
The Silk Road stands as a testament to the enduring ties between the Middle East and
Asia. Through its historical significance and impact on regional economies, it exemplifies the
power of trade in fostering cultural exchange and economic prosperity. Today, as global
connectivity expands, the lessons of the Silk Road continue to resonate, emphasizing the
importance of cooperation, understanding, and collaboration between Middle Eastern and
Asian nations.

References
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Christian, David. “Silk Roads or Steppe Roads? The Silk Roads in World History.” Journal of
World History, vol. 11, no. 1, 2000, pp. 1-26.
Foltz, Richard C. “Religions of the Silk Road: Premodern Patterns of Globalization.” Palgrave
Macmillan, 2010.
Hill, John E. “Through the Jade Gate: China to Rome: A Study of the Silk Routes 1st to 2nd
Centuries CE.” BookSurge Publishing, 2009.
Hansen, Valerie. “The Silk Road: A New History.” Oxford University Press, 2012.
Latham, Edward. “The Silk Road: An Illustrated History.” Hippocrene Books, 2002.
Liu, Xinru. “The Silk Road in World History.” Oxford University Press, 2010.