India mulls ring fence for Emirates investors

India-UAE to sign agreement to put in place structure for $75 billion investment in infrastructure

On Wednesday, India and the United Arab Emirates will ink an agreement to put in place the governance structure that will facilitate $75-billion investment over 10 years in infrastructure in India from the Emirates.

The $75-billion UAE-India Infrastructure Investment Fund was agreed to be set up when Prime Minister (PM) Narendra Modi had visited the UAE in August 2015. However, the UAE has complained that New Delhi has delayed putting in place the necessary governance structures to pave the way for these investments in India’s ports, roads, railways, ports, airports, and industrial corridors and parks.

Crown Prince of Abu Dhabi Sheikh Mohammed bin Zayed Al Nahyan on Tuesday arrived in New Delhi on a three-day state visit. Signifying the recent closeness of India-UAE ties, the PM received the Crown Prince at the airport. The Crown Prince, who had last visited India in February 2016, is the chief guest at this year's Republic Day parade.

The PM and the Crown Prince will have delegation-level talks on Wednesday, and the two sides are likely to sign 16 agreements, including a strategic cooperation pact. This will institutionalise a biannual strategic dialogue between India and the UAE at the minister-of-state level. The two sides also hope to sign a memorandum of understanding between the UAE’s investment fund and India’s National Investment and Infrastructure Fund (NIIF) to put in place a framework as to how the $75 billion will be administered and which all sectors it can be invested in. Officials said five to six projects each in highways and railways sectors have been identified for investments. 

‘Ring fence’

On the UAE’s demands that “legacy issues” relating to their investors, particularly cases in courts, be resolved soon, economic relations secretary in the external affairs ministry, Amar Sinha, said: “Specific demand is that we resolve these issues quickly. That is in nutshell. It has taken time because we are not able to predict. These are not executive decisions, they are sub judice and are in different courts.”

Sinha said New Delhi “will try to see whether we can ring-fence some of their investors without diluting the main cases...because there are Indians also involved in these cases...given the restriction and given the fact that our judiciary will have to work with them so that we have early resolution of these cases."

The UAE wants relaxation in foreign direct investment in sectors like ports and real estate. UAE companies that are facing issues in India with regard to investments include telecom firm Etisalat, marine terminals developer DP World, Emaar (realty) and TAQA (energy). 

Following a Supreme Court order cancelling its 13 telecom licences, Etisalat exited from India operations and has sought refund of the licence fee as well as bank guarantees.

India's Ambassador to UAE Navdeep Singh Suri said in several cases, there has been "tangible progress". "So many of 'legacy cases' have been resolved by the high-level taskforce that was established after the last visit (by the UAE leader) and friends in the UAE acknowledge the progress that has been made in the last several months in resolving some long-standing cases," Suri said.

During the visit, the two sides expect "substantial" outcome in the area of defence and security where India and UAE will "solidify" their cooperation given shared views on common threat. Under the defence and security cooperation, apart from joint manufacturing, the two sides are looking at armament, armoured personnel carriers and joint production of aircraft.

Asserting that the UAE was a major trade partner for India, he said both sides were also looking at signing an MoU on providing remedial steps in case of any commercial differences before going for legal process.