India cabinet approves Middle East-Europe trade corridor pact

Image courtesy: WAM

India’s cabinet has approved an Inter-Governmental Framework Agreement with the UAE to continue working on a major trade corridor that will link the South Asian country to Europe through the Middle East.

“The IGFA includes areas of cooperation between the two countries to explore further potential of future joint investment and collaboration in respect of the development of the India-Middle East Europe Economic Corridor (IMEC),” according to an Indian Cabinet announcement.

The IMEC corridor — touted by the US and its allies during the G20 summit last September — is an ambitious ship and rail network that will connect Europe with India through the UAE, Saudi Arabia, Jordan and Israel.

The project is expected to boost trade and speed up the transport of goods between the two continents.

India, UAE trade pact

Meanwhile, the agreement with the UAE was signed in February during Prime Minister Narendra Modi’s state visit to the Gulf state.

It builds on previous understandings and cooperation between the two nations and is expected to foster further regional connectivity.

“The agreement contains a detailed framework for cooperation between the two countries. Such cooperation will be based on a set of mutually agreed principles, guidelines and agreements consistent with the relevant rules and regulations of the jurisdiction of the two countries,” the announcement added.

The main elements of the framework include the development and management of a logistics platform, including a digital ecosystem and provision of supply chain services to handle all types of general cargo, bulk, containers and liquid bulk to enable IMEC.

The framework agreement appears to signal that India and the UAE are pushing forward with the plan to establish the corridor at a time when attacks on shipping vessels sailing the Red Sea by Yemen’s Houthi rebels are endangering trade via the sea route.

The two countries also signed a bilateral investment treaty and exchanged cooperation agreements covering electrical interconnection, trade, and digital infrastructure during Prime Minister Modi’s visit to Abu Dhabi.

India is the UAE’s second-largest trading partner, with the bilateral trade rising to $85bn in 2022/23 and it is expected to reach $100bn before the end of the decade.

Read: UAE-India partnership: By the numbers