UAE President and Ruler of Abu Dhabi Sheikh Mohamed bin Zayed Al Nahyan (MbZ) paid a nearly two-hour visit to Delhi with only one formal meeting with Prime Minister Narendra Modi.

Existing Economic Relationship

• Trade Partner Ranking: The UAE is India’s third-largest trading partner, second-largest export destination, and seventh-largest foreign investor.
• Comprehensive Economic Partnership Agreement (CEPA): The UAE signed its first bilateral trade agreement with India in 2022.

Key Outcomes of the Visit

• Economic Commitments: Both sides committed to doubling bilateral trade to $ 200 billion.
  • An LNG deal worth 3 billion dollars was announced.
  • The UAE agreed to invest in Gujarat.
• Strategic Defence Partnership: The major announcement was the intention to conclude a framework agreement for an India–UAE Strategic Defence Partnership.
  • This would be the first defence partnership of its kind between the two countries.
  • The development is being closely watched by West Asia and South Asia due to existing regional security tensions.

Regional Geopolitical Background

• UAE–Saudi Tensions: MbZ’s visit occurred amid heightened tensions between the UAE and Saudi Arabia.
  • Both countries were earlier part of the same military coalition against the Houthi uprising in 2014.
  • Their rivalry has intensified over influence in Sudan.
  • There is now limited communication between MbZ and Saudi leader Mohammed bin Salman (MbS), which is being described as a new Gulf “cold war”.
• Wider Regional Instability: Protests in Iran and U.S. threats of intervention have added to instability.
  • The Gaza ceasefire remains fragile.
  • U.S. President Donald Trump’s proposal for a “Board of Peace” has raised concerns about external intervention.
• The Triple Axis: After Israel’s bombing in Qatar in September 2025, Saudi Arabia reportedly fast-tracked a mutual defence pact with Pakistan, with indications that Türkiye may also be brought into the arrangement. 
  • This emerging security bloc risks marginalising the UAE, prompting it to hedge by deepening strategic and defence cooperation with India as a counter-balancing partnership.

Strategic Concerns for India

• Defence Perception Risk: The India–UAE defence talks are being viewed by some as an alignment against other regional blocs, even though India has clarified that it is not seeking involvement in future regional conflicts.
• Need for Gulf Balance: With nearly 10 million Indians living in GCC countries, India must balance its ties with the UAE with stable relations across the Gulf.
• Energy Dependence: As sanctions have limited alternative suppliers, India remains heavily reliant on the GCC for energy security.
• Connectivity Vulnerability: Projects like Chabahar Port, INSTC (International North–South Transport Corridor), and IMEC (India–Middle East–Europe Economic Corridor) depend on regional cooperation, which is strained by current tensions.

Check Out UPSC CSE Books

Visit PW Store

Conclusion

In a fractured West Asian order, India must combine diplomatic caution with strategic autonomy to protect its economic, energy, diaspora, and connectivity interests without being drawn into regional rivalries.

DOWNLOAD PDF

A group of Indian tourists interrupted a street performer in Paris by shouting regional and political slogans (e.g., “Jai Maharashtra”, “Chhatrapati Shivaji Maharaj ki Jai”, and mentions of Eknath Shinde, etc.).

Pattern of Similar Behaviour Abroad

• Not an Isolated Incident: Such episodes are recurring and collectively harm India’s soft power and the image of the Indian diaspora abroad.
• London (UK): Complaints arose over river pollution and excessive noise during Ganesh Visarjan, prompting objections from local residents and scrutiny by civic authorities.
• New Zealand: Concerns about public order and traffic disruption during a Nagar Kirtan (Sikh religious procession) have led to mixed responses from the host community.
• Broader Implications: In societies already witnessing a rise in right-wing and anti-immigration sentiments, such incidents risk reinforcing xenophobic and racist stereotypes against Indians, undermining social cohesion and diaspora goodwill.

Reasons for Such Behaviour

• Beyond Civic Sense: The behaviour cannot be explained merely as a lack of civic sense and has deeper psychological roots.
• Ethnocentrism: The belief that one’s own culture is supreme, often used to overcompensate for insecurities in a foreign environment.
• Jingoism vs. Patriotism: Shouting slogans while disturbing others is jingoism; true civic sense is real patriotism.
• Global Image: Tourists act as unofficial ambassadors; aggressive behaviour or breaking public rules fuels racism and harms India’s soft power.

Philosophical Anchor

• G. V. Karandikar (Jnanpith Awardee): His idea states that when the walls of blood collapse, humanity is one clan. This thought directly challenges narrow nationalism and rigid identity politics.
• Nida Fazli (Urdu Poet): His line asks who recognises silence in a marketplace full of noise. The lesson is that spirituality lies in awareness and silence, not in loud expression.
• Sant Dnyaneshwar: His statement was “He Vishvachi Majhe Ghar” (The whole universe is my home). The ethical inference is that if the world is one’s home, people must respect places and communities instead of creating disturbance.

Way Forward

• Soft Power Approach (Joseph Nye): India’s global strength lies in yoga, music, dignity, and culture rather than aggressive identity assertion.
• Civic Sense as Patriotism: Following traffic rules and foreign laws should be considered true deshbhakti.
• Constitutional Duty under Article 51A: Citizens have a fundamental duty to promote brotherhood and scientific temper.
• Role of Empathy: Pride in regional identity and respect for host societies can coexist.

Check Out UPSC CSE Books

Visit PW Store

Conclusion

Spirituality and culture should not be imposed on others; inner awareness and respecting local rules are more important than aggressive displays.

DOWNLOAD PDF

Recently, the Supreme Court denied tax relief to Tiger Global on capital gains from its exit from Flipkart.

Key Terms

• About DTAA (Double Taxation Avoidance Agreement): An agreement between two countries so that an investor does not pay tax twice on the same income.
• Tax Havens: Countries like Mauritius that offer zero capital gains tax, leading companies to set up shell entities there to route investments into India.
• Tax Residency Certificate (TRC): Previously, a TRC from Mauritius was considered sufficient proof of residency, exempting companies from Indian tax questions.
  • It was called the Golden Pass because it was sufficient to claim DTAA benefits.
• Grandfathering Clause: A grandfathering clause protects past transactions or investments from new laws or policy changes.
• Treaty shopping: It is the practice of routing investments through a third country only to take advantage of favourable tax treaty benefits, without having real business operations there.

History: Why Did India Allow the Mauritius Route?

• 1991 Balance of Payments Crisis: India was facing a severe foreign exchange shortage. The country urgently needed foreign capital inflows.
• Policy Response: The government deliberately chose to keep the India–Mauritius DTAA liberal. The objective was to attract Foreign Direct Investment (FDI) into India.
• Investment Signal: The policy effectively conveyed the message: “Invest in India, and we will not tax your capital gains.”
• Outcome: The strategy succeeded in attracting billions of dollars of foreign investment over several years through the Mauritius route.

The Case

• Use of Treaty Shopping via Mauritius Entity: Tiger Global (a US firm) used a Mauritius-based shell company to invest in Flipkart (then headquartered in Singapore). 
• Tax Authority’s Allegation: When Tiger Global sold its shares to Walmart for a profit of ₹14,500 crore, the Indian Tax Department demanded tax, arguing the Mauritius entity was merely a “shell” to avoid Indian taxes.
• Nature of Dispute: The dispute was whether India could levy capital gains tax on these exits or whether the investor was protected under the India–Mauritius tax treaty and grandfathering provisions.

Legal Basis of Tiger Global’s Claim

• India–Mauritius DTAA: Under the earlier treaty, capital gains were taxable only in Mauritius. 
  • Since Mauritius did not levy capital gains tax, no tax was payable in India.
• Tax Residency Certificate (TRC): Tiger Global possessed a TRC showing that its investment vehicle was a tax resident of Mauritius. 
  • Earlier government policy treated TRC as sufficient proof to claim treaty benefits.
• Grandfathering under 2016 Amendment: In 2016, India amended the treaty to tax capital gains in India, but investments made before 1 April 2017 were exempt. 
  • Tiger Global’s investments were made between 2011 and 2015 and were therefore deemed protected.

Recent Supreme Court Decision

• Outcome: The court rejected Tiger Global’s claim and allowed India to tax the capital gains.
• Substance over Form: The court held that treaty benefits cannot be claimed solely on the basis of legal paperwork if the economic reality shows otherwise.
• Key Finding: Although the investment entity was incorporated in Mauritius, the real control and decision-making, described as the “head and brain,” were located in the United States. The Mauritius entity was treated as a conduit or signboard arrangement.

Departure from Earlier Treaty Practice

• Government Circular Ignored: CBDT Circular No. 789 (2000) had stated that TRC would be sufficient proof for claiming treaty benefits and that no further inquiry was required.
• Judicial U-turn: In 2003, the Supreme Court upheld the “Mauritius route” as a “necessary evil” for investment, but the recent judgment supports the Tax Department, creating a “crisis of credibility.
  • Lord Bingham (on the “Rule of Law”): “The law must be accessible and predictable.”
• Present Position: The present ruling permits authorities to look beyond TRC and examine economic substance, marking a shift from earlier certainty-based treaty interpretation.
• Tax planning and tax avoidance: The court also set out how it draws the line between tax planning and tax avoidance. 
  • Tax planning may be legitimate if it operates “within the framework of law”.
  • But when a structure involves “colourable devices, deceptive or indirect methods to deliberately avoid paying tax, it becomes illegal and unacceptable.

Check Out UPSC CSE Books

Visit PW Store

Implications of the Supreme Court Decision

• Credibility of Grandfathering: Ignoring protection for pre-2017 investments undermines confidence that policy changes will not affect past investments.
• Investor Confidence: When past promises, circulars, and judicial interpretations are set aside, it creates uncertainty for long-term investors.
• Comparison with Past Experience: The judgment revives fears associated with earlier retrospective tax disputes, which had damaged India’s investment reputation.

Conclusion

While the judgment strengthens anti-tax-avoidance enforcement through substance-based scrutiny, it also raises concerns about predictability, legal certainty, and the credibility of government assurances in international taxation.

DOWNLOAD PDF