UAE and India Partnership for Progress

In Celebration of a Legendary Friendship is the title of a recent book commemorating age-old UAE-India relations. While there are no second thoughts about the validity of this spirit, the visit of Indian President Pratibha Patil to the UAE serves as a reminder that this time-tested bond, while rooted in the past, needs to recalibrate its approach, focus on the present, and evolve a vision for the future.

Figuratively, the bilateral business record is envious — the non-oil trade bill was $48.3 billion in 2008-09. Having replaced China as the UAE’s largest trade partner last year, India now expects to more than double this figure over the next five years. While this outlook is encouraging, translating it into reality would require shifting from transactional to strategic engagement.

Today, the world is abuzz with India’s success story. While it really did not require US President Barack Obama to certify that India is no longer a ‘rising’ power, but has already ‘risen’, it could change the way the developed countries view India or the way India projects itself to the world.

It is undeniable that India is a story of two parts — one rapidly developing and the other, yearning to develop. And, herein lies the challenge of building perception bridges for both India and the UAE. While ‘new’ India needs to leverage its newfound status internationally without allowing the ‘old’ to create roadblocks, the UAE too needs to tap into ‘advancing’ India rather than be discouraged by its ‘rudimentary’ half.

Though perceptions are slowly changing, it is fairly common for the Gulf region to still view India from the prism of the old. Comparisons are often made, for example, of infrastructure, or lack of it, in Indian cities, with those in the West or in other parts of Asia, as they do about the world’s projection of India as a future ‘superpower’ while half its population is still ‘super poor’.

It also ought to be internalized that India is not a ‘country on steroids’; rather, it is a ‘country on vitamins’. It is on the road to becoming a ‘developed’ country not in terms of its physical paraphernalia and grandeur, but due to the strengths of its demography and effort to build a knowledge economy. India is shaping to be an incubator of youth and vibrancy, which is being reflected in its ideas and scientific innovations. In the process, it is shaping to be a better model of tradition coexisting with modernity, which is also the model of development that the UAE is currently charting.

As much as population was identified as India’s chief trouble-maker, it is now shaping to be the chief trouble-shooter. Indian economy is, today, most dynamic in terms of its human capital. At an average age of 23, India has one of the youngest populations in the world, which is expected to last till 2050, thus fuelling growth. On the other hand, most other countries of the world are ageing, thus retarding growth.

With excellent “scientific sultanates” in research and development, Indians are no longer waiting for solutions, but are manufacturing them. Growth during the last two decades is a result of its entrepreneurial energy, which was first evident in the development of the information technology industry, but has now become more broad-based and put India on a path of knowledge-intensive growth. India is combining rapidly growing, cheap IT connectivity and increasing skilled technologists to produce new low-cost solutions to longstanding problems.

Thus, the very factors that were available for Europe and the United States in the 19^th and 20^th centuries, are now available for India to tap into during the 21^st century. These factors will not only make India produce more, but consume more as well. The world’s largest middle class is expected to expand to nearly 600 million by 2030. This is partly the reason for experts to believe that it is possible for India to grow at an average of five per cent until 2050, which would be ‘unique’ and ‘unprecedented’ in economic history.

Simultaneously, a ‘new’ UAE is emerging from the ‘old,’ which India needs to recognize too. As part of its recent emphasis to pursue not only a strong but also a sustainable economy, the UAE is looking beyond oil and pursuing a robust economic diversification policy. The non-oil sector contributed 71 per cent of the country’s GDP in 2009. It is intelligently using its oil wealth to focus on the industries of the future — transport, logistics, hospitality, tourism and renewable energy, among others.

As part of its economic reforms, it is encouraging private sector growth, which in turn is capable of providing competitive and less privileged nationals with opportunities to take up challenging jobs, rather than rely just on the public sector. Options for better and higher education are expanding, not only because they are a necessity for both nationals and expatriates, but also because they are focal components of human resource development in a post-oil paradigm.

Perhaps the best indication of the new UAE is that while it was a country that boasted of one global city in Dubai, it now has two, with what Abu Dhabi is rapidly shaping to be.

In this milieu, while trade has formed the backbone of UAE-India ties over centuries, the new age economy is considerably influenced by the services sector. India’s reservoir of ancient traditions, innovations and talent, adds a modern dynamic to bilateral relations. As India leverages its strength as a global knowledge power and makes concerted efforts to tap into the economic potential of this sector, the UAE is also focusing not only on creating new knowledge but also translating it into innovations.

Thus, the UAE and India see the development of knowledge economies as a natural extension of their long-standing role at the centre of world trade and, now, global affairs. Both are keen to use education as the foundation for national development and progress. And, most importantly, both believe that a successful economy is key to stability and better life for their people.

These shared values augur well for future strategic cooperation between the two countries in economic, security, defense, as well as research and development spheres, which sets the stage for political powerplay.

Dr. N. Janardhan is a UAE-based political analyst on Gulf-Asia affairs, and author of “Boom Amid Gloom – The Spirit of Possibility in the 21st Century Gulf” (Ithaca Press, UK), to be published in early 2011.