|Trade Barriers Impacting Indian Exports:
Chinese Economic Influence in the UAE:
- Non-Tariff Barriers (NTBs) like Sanitary and Phytosanitary (SPS) measures and Technical Barriers to Trade (TBT), notably mandatory Halal certification, have impeded Indian exports, particularly in sectors such as poultry, meat, and processed foods.
- These barriers have led to a significant decline in processed food exports to the UAE by almost 30% in recent years, according to a report from India’s Ministry of Commerce and Industry.
Challenges of the Kafala System:
- China’s “Cheque Book Diplomacy,” characterized by offering low-interest loans, has overshadowed Indian economic endeavors in the UAE and the broader Middle East.
- Data from the American Enterprise Institute’s China Global Investment Tracker reveals that China’s investments and contracts in the UAE exceeded USD 30 billion between 2005 and 2020, significantly surpassing Indian ventures in the region.
Concerns Over UAE’s Financial Support to Pakistan:
- The Kafala system in the UAE, which grants employers considerable power over immigrant laborers, especially those in low-wage jobs, presents significant human rights concerns.
- Instances of passport confiscation, delayed wages, and poor living conditions underscore the challenges faced by migrant workers under this system.
Diplomatic Balancing Act Amid Regional Conflicts:
- The UAE’s substantial financial aid to Pakistan raises apprehensions about the potential misuse of these funds, considering Pakistan’s history of sponsoring cross-border terrorism against India.
- For instance, in 2019, the UAE pledged USD 3 billion to bolster Pakistan’s foreign exchange reserves, raising concerns about the funds’ diversion towards activities detrimental to India’s national security.
- India finds itself in a delicate diplomatic position due to the ongoing conflict between Iran and Arab nations, notably the UAE.
- Despite U.S. sanctions on Iran, India continued to import oil from the country, accounting for approximately 10% of its total oil imports. This underscores issues in India’s need to navigate its relations with both Iran and the Arab world cautiously.
- Recent outbreak of war between Israel and Hamas further aggravates the challenges as it runs the proposed IMEC into rough weather.