India’s strategic gateways: The UAE and Singapore
India’s strategic gateways: The UAE and Singapore
WRITTEN BY GOKUL SAHNI
31 March 2020
Indian foreign policy has often prioritized the Global South. Large developing countries have often been seen as partners with converging interests --think of the Non-Aligned Movement, BRICS, or even IBSA. This approach, however, prioritizes potential returns over current realities. Brazil and South Africa are two such examples, coincidentally invited by India as the Chief Guest for its 2020 and 2019 Republic Day celebrations.
This focus on solidarity with large developing countries conceals a reality in India’s foreign policy: some small, wealthy, and highly developed countries are essential partners for India’s growth and prosperity. No two countries exemplify this better than the UAE and Singapore, which are already important economic partners for India, and may emerge as India’s western and eastern strategic gateways respectively.
Money matters
Despite being non-G20 economies, the United Arab Emirates (UAE) and Singapore have outsized economic importance for India. Consider trade, where the UAE and Singapore are India’s 3rd and 6th largest trading partners respectively. India’s trade with the UAE of almost US$60 billion in fiscal year 2019 is comparable to the approximately US$70 billion of trade it had with all of Africa. A significant portion of this trade is the import of crude oil at $9.5 billion, with the UAE being India’s 4th largest source. The relationship has, however, expanded beyond that of simple buyer-seller, with the Abu Dhabi National Oil Company signing a pact with the Indian government related to filling significant portions of India’s 5.33 million MT of emergency oil storage. Similarly, India’s fiscal year 2019 trade with Singapore of USD$27.85 billion is over 1.5 times its trade with the world’s third largest economy, Japan.
It is perhaps no exaggeration to state that it is more important for the 5.5 million residents of Singapore to have a positive view about India as a country to invest in, to partner with, and to travel to, than the 108 million residents of the Philippines.
This should not be surprising. Singapore and Dubai, the UAE’s largest city, are home to organizations, whether financial or corporate, which cover India as a major market, and this salience is even greater in the investment world. Singapore emerged as the largest destination for FDI (what is this?) in India in 2019, with an inflow of US$16.23 billion. Both countries are home to some of the world’s largest sovereign wealth funds: Abu Dhabi Investment Authority (ADIA) and Investment Corporation of Dubai in the UAE, and GIC and Temasek Holdings in Singapore.
ADIA, which has assets under management of almost USD$700 billion, notes in its 2018 annual report that, “we remain confident about the relative prospects of emerging markets – particularly China and India – versus the developed world, and this will be reflected in the emphasis we place on these markets”. The Government of Singapore is already one of the largest foreign institutional investors in Indian equities, particularly through GIC’s investments in Indian infrastructure. In total, Singapore-based investors have AUM of over US$100 billion in India.
Connecting people
Singapore and the UAE are major destinations for the Indian diaspora. The UAE is home to the largest number of non-resident Indians (NRIs) in the world, at 3.3 million, and is also the largest source of overseas remittances to India, accounting for 26.9% of total remittances. Singapore also has a large contingent of 350,000 NRIs, along with another 300,000 citizens of Indian origin.
This connection of people is part of the broader connectivity that India has with both countries. While neither are immediate neighbours, the UAE and Singapore have emerged as essential pillions of connectivity to India across both air and maritime domains. The UAE, and in particular Dubai, is India’s essential lifeline from an air connectivity perspective. A total of 18.96 million passengers flew between India and the UAE in 2018 - equivalent to 30% of India’s total passenger air traffic of 63.21 million for the year. The second largest country, after the UAE, for passenger air traffic to India? Singapore, at 4.72 million, which is 7.5% of India’s total passenger air traffic. The UAE also leads in air freight cargo to and from India: at over 360,000 MT, it accounted for 20% of India’s total air freight cargo of 1.8 million MT in 2018. Singapore is furthermore directly connected to 15 Indian cities by 8 airlines with more than 500 weekly flights both ways. The Dubai International Airport and Singapore Changi Airport are, therefore, more important to India’s connectivity than any of its domestic airports.
Both countries have also emerged as global logistics hubs, with Singapore and UAE ranked 7th and 11th respectively in the World Bank’s latest Logistics Performance Index. An important component of this has been maritime ports, with Singapore being the world’s largest transshipment container port, and Jebel Ali in the UAE being the busiest container port in the world outside of east and southeast Asia.
Strategic similarities
Both the UAE and Singapore have emerged as important supporters of a greater role for India in global affairs, given their desire for stability in the international order and across the global commons. India’s recent push for ‘issue-based alignments’ provides opportunities to work with these countries and build ‘minilaterals’ with them and the important strategic players in their respective regions. Saudi Arabia with UAE, and Indonesia with Singapore, are such examples. Above all, the UAE and Singapore can act as gateways into the broader regions of West Asia and South-East Asia.
Maritime security has already become a key component of India’s relationship with the two countries. India’s security relationship with Singapore is strong and broad-based across all three services, and even includes provisions for Singapore’s Army and Air Force to train in India. Naval exercises between India and the UAE started recently in March 2018, but are set to become an integral part of the burgeoning strategic ties between the two countries which already include counter-terrorism, and even a high profile covert operation.
Same-same, but different
Despite their many similarities, there are a few important differences between the UAE and Singapore. The oil-rich Gulf monarchy in recent years has become quite geopolitically active, especially in the Horn of Africa, with The Economist noting that, “uniquely among Arab states, it tries to project military power far beyond its borders”. The deployment of UAE forces in Yemen in 2015 shows that the Gulf monarchy has far greater geopolitical risk appetite than Singapore. The presence of foreign militaries in the UAE, with the United States at Dhafra Air Base and France at Camp de la Paix, provides unique opportunities for India to boost military cooperation in the region with its fellow Indo-Pacific partners.
Singapore, while hardly shy about investing in hard power capabilities --from acquiring F-35B fighters from the US to ambitious naval procurement plans-- prefers to lead via human capital. The nomination of Singapore’s candidate to head the World Intellectual Property Organization last month was the first instance of a Singaporean leading a UN agency. The city-state was ranked 1st globally in the World Economic Forum’s Global Competitiveness Index 2019, leading across diverse categories such as public sector performance, infrastructure, trade openness and labour markets. The Lowy Institute’s Asia Power Index 2019 ranks Singapore as the most powerful nation in South-East Asia, ahead of larger economies such as Indonesia and Thailand, on account of its well-developed networks and excellent economic and military relationships.
The age of smart powers
To some degree, the current Indian administration has recognized the importance of these newer strategic gateways, with Prime Minister Modi being the first Indian PM in 34 years to visit the UAE. Since his initial visit in 2015, Modi has made two further visits and has spoken about how the UAE can be a ‘valuable partner’ in India’s US$5 trillion economy goal, calling for greater cooperation across renewable energy, food, ports, airports, defence manufacturing, infrastructure and housing. With Singapore, India has developed five areas of cooperation to enhance bilateral relations, known as the ‘5-S Plank’ to work to: scale up trade & investment, speed up connectivity, rejuvenate cities and urban areas, focus on skills development, and state focus.
Essentially, both the UAE and Singapore have looked past disadvantages of size and region to emerge as ‘smart powers’, with some even recognizing them as middle powers. A ‘smart power’ uses both hard and soft power in the right mix and in the right context. Both the UAE and Singapore are now constants on the global stage --think glitzy hotels, world-class museums, F1 races, foreign universities opening Asian campuses, and overall, becoming the meeting points for global elites. These countries are already important to India’s present, with their relevance set to grow even further in the future. While small, both pack a punch.
It is perhaps no exaggeration to state that it is more important for the 5.5 million residents of Singapore to have a positive view about India as a country to invest in, to partner with, and to travel to, than the 108 million residents of the Philippines. Or that the UAE, in fact, is far more crucial for India’s connectivity than the best-case scenario for India-Iran relations and the ‘game-changer’ that the Chabahar Port may become. A forward-looking Indian foreign policy must, therefore, give appropriate importance to these two strategic gateways which are crucial for India’s rise as a great power.
DISCLAIMER: All views expressed are those of the writer and do not necessarily represent that of the 9DASHLINE.com platform.
Author biography
Gokul Sahni is based in Singapore and writes on geopolitics and geoeconomics, with a particular focus on Indian foreign policy. He holds an MSc in International Relations from the S. Rajaratnam School of International Studies (RSIS) and an MBA from the Saïd Business School, University of Oxford. All views and opinions expressed are personal. Image credit: CC BY-NC 4.0/NASA Johnson/Flickr.