India And UAE Sign Trans-continental Trade Corridor Deal Amid Regional Tensions

India and the United Arab Emirates (UAE) have signed a landmark agreement to establish a transcontinental trade corridor connecting Europe and India via important Middle Eastern regions through rail and water. The deal was unveiled during Indian Prime Minister Narendra Modi’s visit to the Gulf state and was endorsed by the United States and the European Union.

The framework agreement is a critical step in improving regional connectivity between the two countries, as revealed by the Indian foreign ministry. The foreign ministry highlighted the agreement’s importance in furthering existing partnerships and mutual understanding between India and the UAE, even though the agreement details are still unknown.

The corridor, announced in September of last year during the G20 meeting in New Delhi, intends to run from India to the United Arab Emirates via Saudi Arabia and then across the Arabian Sea to Europe via Jordan and Israel. The Indian foreign ministry’s statement highlights the long-standing trade relations between India and the UAE for over a century.

The agreement, however, is announced against the backdrop of increased regional tensions, particularly the continuing battle in Gaza, which has disrupted American-backed efforts to bring Israel and its Arab neighbours closer together. Saudi Arabia has put a halt to preparations to normalise relations with Israel amid this instability, further complicating the current geopolitical situation.

Prime Minister Modi and UAE President Sheikh Mohamed bin Zayed al Nahyan had conversations throughout his tour, underscoring the close relationship between the two leaders. Despite the current obstacles, Sheikh Mohamed was optimistic about the future of India-UAE relations, highlighting their shared goals of regional security and advancement.

Despite continuing to criticise Israel’s conduct in Gaza, the UAE’s diplomatic rapprochement with Israel under the Abraham Accords in 2020 reflects a shifting geopolitical situation in the area. The framework agreement between the UAE and India, which demonstrates a commitment to building the trade corridor, might put China’s Belt and Road Initiative at risk and impact the dynamics of global commerce.

Additionally, the deal is made in the context of rising tensions in the area, which are demonstrated by the attacks on shipping vessels in the Red Sea by the Yemeni Houthi movement. The attacks have sparked worries about the safety of marine commerce routes, as they were allegedly carried out in retaliation for Israel’s activities in Gaza.

Beyond the trade corridor agreement, bilateral relations between India and the United Arab Emirates have been reinforced by the signature of a bilateral investment treaty and the exchange of cooperation agreements covering trade, digital infrastructure, and electrical connectivity.

The Indian Prime Minister’s visit to the Gulf State showcases India’s dedication to strengthening ties with one of its foremost trading partners. This has been PM Narendra Modi’s 7th visit to the UAE since taking the pledge as the PM nearly a decade ago. His participation in the conference in Dubai highlights the importance of Indo-UAE relations in promoting stability and economic prosperity in the region.

Reference: Reuters, TBSNews

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Source: Maritime Shipping News