India and UAE unveil ambitious trans-continental trade corridor amid regional challenges

In a significant development, India and the United Arab Emirates (UAE) have inked a historic agreement on a trans-continental trade corridor, aiming to connect Europe with India through the Middle East via sea and rail.

This is based on a Reuters report.

The pact, announced during Prime Minister Narendra Modi's visit to the Gulf state, is a collaborative effort supported by the United States and the European Union.

The framework agreement, disclosed by the Indian foreign ministry, marks a crucial step in fostering regional connectivity between the two nations.

While specific details of the agreement were not made public, the ministry emphasised that the corridor would build upon existing understanding and cooperation, enhancing the partnership between India and the UAE.

The ambitious corridor, initially unveiled during the G20 summit in New Delhi last September, seeks to extend from India through the Arabian Sea to the UAE, spanning Saudi Arabia, Jordan, and Israel before reaching Europe.

However, the official statement from the Indian ministry did not explicitly mention other countries besides India and the UAE.

The agreement gains significance amid the ongoing conflict in Gaza, which has disrupted plans for further integration between Israel and its Arab neighbours.

Saudi Arabia has put a halt to normalisation plans amidst the regional instability.

During Modi's visit, he held discussions with UAE President Sheikh Mohamed bin Zayed al Nahyan.

Sheikh Mohamed expressed optimism despite the challenging regional circumstances, stating, "Today, our region is going through a difficult time, but because of our relationship with you, we are building a lot of hope and looking forward to a future with India that is on par with our ambitions."

Despite regional challenges, the UAE has maintained diplomatic relations with Israel, which were established in 2020 under the US-backed Abraham Accords.

The framework agreement between India and the UAE signals a commitment to the trade corridor, potentially impacting China's global trade infrastructure plans and the Belt and Road connectivity strategy.

In the backdrop of the Yemeni Houthi movement's attacks on shipping vessels in the Red Sea, citing protests against Israel's actions in Gaza, the trade route via the sea remains threatened.

India and the UAE signed a bilateral investment pact and exchanged cooperation agreements covering commerce, digital infrastructure, and electrical connectivity in addition to the corridor deal.

In addition to addressing the Indian diaspora, Modi is scheduled to speak at a summit in Dubai, inaugurate the first stone-built Hindu temple in the Middle East in Abu Dhabi, and make his ninth trip to the Gulf state since taking office.

(With inputs from Reuters)