India-UAE High Level Joint Task Force on Investment

Syllabus: GS 2/IR

In News

• The 12th Meeting of the India-UAE High-Level Joint Task Force on Investments (HLJTFI) took place in Mumbai

About India-UAE High-Level Joint Task Force on Investments (HLJTFI)

• It was established in 2013 to promote trade, investment and economic ties between India and the UAE. 
• It has provided an effective mechanism to discuss opportunities and prospects for further investments in India and the UAE, while acting as a forum to resolve issues faced by investors of the two countries.

Latest Developments 

• Bilateral Investment Treaty signed during Prime Minister Modi’s 2024 UAE visit, it was ratified and entered into force on 31 August 2024.
  • It replaces the previous Bilateral Investment Promotion and Protection Agreement (BIPPA) that expired in September 2024. 
  • The treaty aims to protect and encourage bilateral investments by providing investor safeguards while ensuring the state’s regulatory authority.
    • The treaty provides protection against expropriation, ensures transparency, and offers compensation for losses.
    • It covers portfolio investment, prohibits abusive treatment, and disallows claims involving corruption or fraud.
• Comprehensive Economic Partnership Agreement (CEPA) active since May 2022, CEPA has boosted trade and FDI between the nations, with bilateral non-oil trade reaching $28.2 billion in H1 2024, a 9.8% YoY increase.
  • Total trade between India and the UAE reached $84 billion in 2023-24, with a reduced trade deficit of $12 billion. 
  • Non-oil trade increased by 9.8%, and UAE FDI into India tripled, reaching $3.35 billion.
• Foreign Direct Investment (FDI): UAE is India’s fourth-largest investor with $3.35 billion invested in 2023, a threefold increase on 2022, while Indian FDI in the UAE reached $2.05 billion.
  • The UAE is India’s seventh-largest FDI source, with USD 19 billion invested from April 2000 to June 2024, while Indian investments in the UAE total USD 15.26 billion. The BIT is expected to enhance investor confidence and strengthen economic ties, complementing the existing free trade agreement between the two nations, effective since May 2021.
• Strategic Sectors: Energy, AI, logistics, food, agriculture, and infrastructure have attracted approximately $100 billion in UAE investments in India.
• GIFT City: The Abu Dhabi Investment Authority (ADIA) will establish a subsidiary in India’s GIFT City.
• Digital Payments:  India and the UAE are working to interlink India’s UPI and UAE’s AANI systems, facilitating seamless cross-border transactions for over 3 million Indians in the UAE.
• Food Parks in India: The UAE has committed to investing $2 billion in food parks in India over the next 2-2.5 years. These parks will ensure UAE’s food security, raise Indian farmers’ incomes, and create jobs. A working group will oversee the development of food corridors.
• Invest India Office: India will open its first “Invest India” office in Dubai, and the UAE will open a similar office in New Delhi.
• Bharat Mart: Expected to be completed by 2026, Bharat Mart will provide Indian companies with world-class logistics. Over 9,000 expressions of interest have been received for 1,400 units.
• IIFT in Dubai: The Indian Institute of Foreign Trade (IIFT) will open its first overseas campus in Dubai, with training programs starting by 2025.
• Nuclear cooperation: In September 2024 ,India and the United Arab Emirates (UAE) signed their first Memorandum of Understanding (MoU) for civil nuclear cooperation.
  • The MoU is part of UAE’s broader policy of investing in nuclear energy, and it is tied to a trilateral cooperation framework between India, UAE, and France, launched in 2022 to focus on energy projects, including solar and nuclear.

Challenges 

• India has raised concerns over the implementation of the rules of origin under the India-UAE Comprehensive Economic Partnership Agreement (CEPA) for silver, as there was a spurt in its imports following the implementation of the trade pact. 
• There are issues related to labor rights for expatriates, geopolitical tensions in the region.

Conclusion and Way Forward 

• The India-UAE relationship holds significant potential for growth, driven by both nations’ goals of economic diversification and sustainable development.
  • Both sides  are discussing obstacles to investments, aiming for timely solutions.
• By leveraging each other’s strengths, particularly in emerging sectors like renewable energy, technology, and innovation, they can create a resilient partnership.

Source: PIB