The BIT which was signed between India and UAE in the year 2013 and came into existence in 2014 has opened a new chapter in commercial relation between the two nations. While the provisions of this treaty offer what may be called provisions of protection and promotion of investments, it is also quite noteworthy for a number of small but significant shifts it brings to the table. To an extent, the treaty deviates from it, however to a significant extent, it can be seen that the treaty adheres to India’s existing investment treaty framework and in doing so, represents both change and continuity within India’s International Investment Agreement (IIA).
Historical Context and Objectives
BITs offer the legal base instrument that offers protection to the foreign investor and a legal guarantee that will encourage key investments. The India-UAE BIT has been intended to provide and maintain favourable conditions for investments by providing to investors of both nations, treatment in accordance with the standard of International Law, protection against expropriation and right to unhampered transfer of funds in connection with investment.
The treaty was negotiated in the backdrop of the general liberalization of the Indian Economy and the focus on agenda of enhancing the investment environment. This was especially important for the UAE as an investor in India, which acted as its strategic partner though had not established very strong legal standards for its investors.
Key highlights and Provisions
However, the India-UAE BIT maintains several archetypical characteristics of India’s investment treaties. But it has also enrolled few things that have the glimpses of new trends that are created in international circle as well as concern of Indian context.
- Fair and Equitable Treatment (FET): This treaty provides a guarantee of a fair and equitable treatment of investments. These include protection against arbitrary and discriminated measures and other features that perform the functions of stable legal framework. Nonetheless, the India-UAE BIT tips the balance slightly in this direction by connecting the FET clause to CIL, which gives a meaner and more specific meaning to the standard of treatment than contracts between greatest states.
- Protection against Expropriation: Direct and indirect expropriation is prohibited by BIT and investors’ property. Loophole named among others, lays down a legal requirements that Expropriation can only take place for public interest, in a reasonable and non-discriminatory manner, and there shall be adequate, immediate, and effective compensation for expropriation. This is in line with the standard included in India’s BITs to make sure that the investor is equally incorporated in case their investment was nationalized or expropriated.
- Free Transfer of Funds: It permits to exchange without limitation, dividends, profits and proceeds in connection with investments. This provision is of immense importance to investors because it allows for the freeness of capital as to be taken out of the country without much hindrance.
- Investor-State Dispute Settlement (ISDS): Another major addition in the India-UAE BIT is the use of more improved ISDS mechanism provisions. Thus the treaty retains the investor’s right to request arbitration although it adds exhaustion of local remedies. This means that before investors can approach the international arbitration to have their grievances addressed they have to go through domestic courts. It noted that it represents this shift in which India is focused on preserving and asserting its jurisdictional sovereignty and providing assurance that several of its laws enacted domestically are still being used properly.
Stability and Evolution in India’s BIT Practice
The India-UAE BIT is a trailer of historical change and continuity in India’s involvement in the investment treaties regimes. However, the treaty has retained some of the guard that has conventionally been associated with Indian BITs such as the FET, non-allowance of expropriation and freedom of making transfers in an unrestricted manner. These provisions do indicate amity towards investor’s certainty in India recognizing the country’s social and political stability which in turn creates a fairly predictable business environment.
At the same time, the treaty brings changes that are relevant to India’s priorities today. The restriction of the FET clause, the insistence on the reciprocal international arbitration procedure, and the use of more specific descriptions and benchmarks point to a general trend towards a greater degree of legal rationality and proportion between investors ’ rights and State sovereignty.
India-UAE Bilateral Relations
India and the United Arab Emirates (UAE) have a complex relationship in the context of bilateral cooperation that is defined now by economic and cultural relations, as well as by important strategic partnerships. Although this relationship has developed over the years, it has been determined by changing dynamics of these two countries in the international system.
Historical Background
India and the UAE share historical bonds as old as recorded history itself with both countries connected by trade that linked the Indian subcontinent with the Arabian Peninsula. When oil was discovered in the UAE in the 20th century subsequently attracting economic wealth and the boom of it resulted into the inflow of a lot of Indians into the country intensifying the relations between the two nations. Today the United Arab Emirates harbours one of the largest communities of Indians with a population of about 3.5 million.
Economic and Trade Relations
The economic aspect remains the foundation for the interaction between India and UAE. The UAE remains India’s third-largest trading partner and the total trade in the past couple of years crosses $60 billion. Some of the sectors, comprising the imports and exports include; petroleum products, precious materials, machinery and food items. The trade and investment relations between the countries have been promoted by the recent agreement known as the Comprehensive Economic Partnership Agreement (CEPA) signed in 2022.
- Investment: The UAE has remained a major investor in the physical and social infrastructure, commercial real estates, power and IT and communication sectors of India. The major investment made by the UAE was reported to be made through the ADIA and some other companies that invested in inclusive Indian projects to bolster the country’s economy. On the other hand, Indian companies have been investing in the UAE mainly in IT, construction and Retail.
- Energy Cooperation: the energy cooperation between India and UAE is an important indicator. Crude oil imports are also low in India primarily from UAE, which has been one of the primary sources of energy for India. The two countries shed have identified and embarked on ventures with common investment in exploration and production of oil and gas within the Indian territories and international markets. Another sector is in the renewable energy sources, as both countries are interested in increasing their capabilities in utilization of solar as well as wind energy.
Strategic and Security Cooperation
In recent years the security cooperation between India and the UAE has enhanced due to convergence of threats to regional security. They both have cooperated in counter-terrorism, maritime and defence strategy format.
- Defence Ties: Both the countries have been carrying out annual exercises and training to improve the forces readiness to address security challenges. The Indian ship’s participation in biennial naval exercise Milan, and other exercises show the growing defence cooperation between UAE and India.
- Counter-Terrorism: There are common factors on fighting terrorism and extremism have been underlined and prioritized as serious threats. They provide information to each other and coordinate measures against terrorism with reference to similar threats. Their willingness to improve security cooperation is evident from signing of the ‘Agreement on Security Cooperation of 2017’.
Culture and People-to People Connect
Culture and people contact is one of the important factors of bilateral relations between India and UAE. Understanding has prevailed due to the fact that Indians’ form the largest expatriate community in the UAE.
- Diaspora: One of the important pillars to support it is the Indian community in the UAE. Indian expatriates are reputed for their significant contribution in the UAE economy through their investment on the social sectors like health care, and shopping malls. Despite this the UAE government has recognized their efforts and has ensured they improve the living standards.
- Cultural Exchange: More over cultural exchange programs and other similar activities have further deepened the bond which exist between the India and the UAE. The annual event like the UAE National Day in India and the India – UAE Culture week in the UAE are examples of such activity. Also, India and the motion picture business are much related to each other due to Bollywood and in the same manner fast food, particularly Indian is well known in UAE.
Education and Technology Partnership
The promising spheres of cooperation between India and the UAE are education and technology. Both countries have appreciated the need for radical transformation of their economy from an innovation point of view and the creation of a knowledge-based economy.
- Educational Collaboration: The United Arab Emirates has turned out to be a popular choice among Indians who wished to pursue their higher studies. Some of the Indian institutions have set up their branches, and some have entered into cooperation with the universities of UAE, thus sharing academic experiences and opportunities for scientific production.
- Technology and Innovation: The cooperation between the UAE and India has been signed in the sectors like information technology, artificial intelligence, space technologies. India’s space agency ISRO has supported the UAE in its Mars mission that orbited the red planet in 2021. Such cooperation emphasizes the possibility of continuing joint work in the field of science and technology.
Diplomatic Engagements
It has become apparent that diplomatic relations and the high level of visits have remained central to India – UAE relations. The two heads of states and government have visited each other many times to re-assert their intentions on enhancing relations.
- High-Level Visits: Certain bilateral visits from the side of the two countries’ leaders have contributed largely to the existing relations; these include the meetings between the Indian Prime Minister Narendra Modi when visiting the UAE, and the UAE Crown Prince Sheikh Mohamed bin Zayed Al Nahyan visiting India. These have paved way for the sealing of numerous bilateral trade and Security, Defence and Energy cooperation deals in form of agreements and MoUs.
- International Cooperation: They have also joined forces on global stages including at the United Nations, Group of Twenty and other global level forums. On the world stage, this has engrossed them more on partnership in support of peace, stability and sustainable development.
Strategic importance of the UAE for India
Policy Partner and Key Trading Partner
- Gateway for Indian Goods: The UAE helps extend the outreach of Indian products to other major markets in the Middle East, Africa and Europe for trade.
- Robust Trade Relations: The trade turnover amounts to more than $60 billion with products including petroleum products, precious metals, machinery, and food.
- Comprehensive Economic Partnership Agreement (CEPA): CEPA was signed in 2022, the agreement has realised improved trade and investment between the two countries and thus economic development.
- Strategic Investment: The continued investments of UAE in infrastructure, real estate, energy and technology sector remain beneficial to India.
Energy Cooperation
- Major Oil Supplier: India meets its energy security needs that come with the supply of crude oil from the UAE.
- Joint Ventures in Energy: Joint ventures in upstream sector including oil and gas exploration and production within the India and other countries.
- Renewable Energy Collaboration: They both want to bring up their capacities of solar and wind energy generation in line with the global targets.
Strategic and Security Partnership
- Defence Cooperation: Defence cooperation through military drills, capacity building, and vendors and manufacturers on defence products and services.
- Maritime Security: India’s biennial naval exercise also shows the importance maritime security cooperation.
- Counter-Terrorism Efforts: Sharing of information and cooperative counter-terrorism practices to deal with shared terrorist risks.
- Security Cooperation Agreement: It was signed in 2017 and provides legal basis for the parties to deepen security cooperation.
Diplomatic and Political Cooperation
- Support for UNSC Bid: The provision of support by the UAE for India’s bid in obtaining a permanent seat in the United Nations Security Council improves India’s status on the international diplomatic map.
- Regional and Global Forums: Coordinated diplomacy in such organizations as the United Nations, the G20, and the International Renewable Energy Agency (IRENA), in the course of advocating peace, emphatic stability and sustainable development.
- Multilateral Diplomacy: Through diplomacy, both countries support the concept of an equitable and poly-polarity international system.
Collaboration on Technology and Education
- Partnership in Innovation: Collaboration in information technology, artificial intelligence, space exploration etc. is a proof that cooperation can bring sophisticated development through innovations.
- Educational Exchanges: Many students from India prefer UAE for their higher education more and more Indian institutions have opened their branches in UAE to enhance academic cooperation and research.
Location of the Strategy and onwards Regional Impact
- Geopolitical Significance: The crossroad location of UAE around Europe, Asia and Africa makes it more important as a trade center in the Middle East.
- Regional Stability: UAE plays an important role in Middle East security because stability in UAE is important for regional security, and this stability is useful for India’s strategic interests.