UAE-India relations set for big leap
Centuries-old ties of commerce, culture and kinship between the United Arab Emirates and India are set for a qualitative leap that could see trade and investment between the two countries increase 60% in the next five years.
The first UAE-India Economic Forum was held in Dubai in November with the theme of investment high on its agenda.
In his keynote address, Indian Finance Minister Arun Jaitley underscored India’s hope that reinforced ties would further attract UAE investment in India, especially in the private sector.
“While public and foreign investment in India has grown by 30% and 40%, respectively, the rate of growth in terms of private investments is still sluggish,” Jaitley said, stressing that India has introduced many changes to encourage private endeavours. These include easier procedures, credibility of decision-making processes, quick approvals and greater stability in addition to India’s consistent track record of growth.
Mohammed Ahmed bin Abdulaziz al-Shehhi, under-secretary at the Ministry of Economy, welcomed the Indian legislation to promote business, underlining “the many success stories of UAE investment” in the subcontinent.
“We look forward to more investments and increased trade opportunities between the two countries,” he said, noting that “the Indian community in the UAE is quite active and their contributions in the growth of the UAE economy are welcomed”.
Bilateral relations flourished over the last three decades but Indian Prime Minister Narendra Modi’s August visit to the UAE, the first by the highest-ranking official in the subcontinent in 34 years, kicked off a new phase of partnership between the two countries.
“One of the most significant announcements during the prime minister’s visit was regarding the establishment of the India-UAE Infrastructure Fund with the aim of reaching the target of $75 billion,” Indian Ambassador to the UAE T.P. Seetharam said in an interview with The Arab Weekly.
“The fund will be dedicated to support investments in India for the next generation of infrastructure projects, especially in railways, ports, roads, airports and industrial corridors and parks,” he said.
The partnership does not solely hinge on trade. The two countries also set an extensive framework of agreements spanning economic, defence, security, culture, consular and community affairs.
“It was agreed, as well, to facilitate the participation of Indian companies in the infrastructure development of the UAE. In the energy sector, it has been decided to promote a strategic partnership through participation in the petroleum sectors in both India and the UAE and through collaboration in third countries,” Seetharam added.
India-UAE trade, valued at $180 million a year in the 1970s, is today about $60 billion annually, making the UAE India’s third largest trading partner for 2014-15, according to figures provided by the Indian Embassy in Abu Dhabi.
The UAE is the second largest export destination of India with more than $33 billion in 2014-15. India was the UAE’s largest trading partner for 2014 with more than $28 billion in non-oil trade.
Mishal Kanoo, deputy chairman of the UAE’s Kanoo Group, forecast a boost in trade of fast-moving consumer goods (FMCG) and commodities. “These are the two sectors where there is likelihood of increased trade and investment in the two countries,” he said.
According to Kanoo, the “Make in India” manufacturing initiative promoted by Modi provided opportunities for UAE businesses and investment firms to invest in information and technology. “The one thing that India excels at is IT,” he said. “Investing in that sector would be a good start.”
On the specific sectors in which investments from the UAE can be channelled, the head of the Dubai-based Indian Business and Professional Council (IBPC) Kulwant Singh said: “India is one of the largest platforms for the UAE or any other investor to look at investments. While there is a huge scope in infrastructure, there is a huge vacuum for funding in areas like Smart cities, affordable houses, oil and gas, power, technology and aviation.”
He said feedback from the Indian and UAE business communities following Modi’s visit was extremely positive. The new momentum and dynamism of the UAE-India partnership was evident in the frequency of ministerial-level visits that followed Modi’s visit.
The UAE Foreign Minister Sheikh Abdullah bin Zayed al-Nahyan visited India in September for the 11th India-UAE Joint Commission Meeting. Initiatives for cooperation were outlined covering a large number of economic sectors as well as defence and space.
Indian Commerce and Industry Minister Nirmala Sitharaman visited the UAE for the third meeting of the High-level Task-Force in October, during which she invited UAE businesses to invest in the subcontinent where the economy is growing at an annual rate of nearly 7.2%.
A team from the UAE Space Agency visited the Indian Space Research Organisation to discuss cooperation and toured the Satellite Assembly, Testing and Control and Information Centre for the Indian Mars probe project.
India and the UAE have regular defence exercises, with New Delhi welcoming the UAE’s decision to participate in the International Fleet Review in early 2016 in India.