Abu Dhabi: India is looking at a raft of dynamic new measures, ranging from allowing businesses to run round-the-clock, providing visas on arrival to foreign investors and registering start-up companies through mobile apps, to remove hurdles to doing business and boost the confidence of investors from the UAE and the rest of world, according to the Indian Ambassador to the UAE.
“These bold ideas are capable of dramatically changing the investment scenario in India,” Dr TP Seetharam told Gulf News in an interview. “For instance, discussions about a policy that will permit businesses to remain open 24X7 has been initiated by the Indian government,” he said.
As per existing laws, it is not possible to run any business 24X7 in India — businesses need to shut down at least once a week and most of them need to close at certain stipulated hours. “But this idea is capable of dramatically changing things. Whether it’s restaurants or garment industries or gas stations, once such businesses begin working in shifts, they will offer vastly more job and business opportunities for everyone,” Seetharam said.
According to the ambassador, the measure is not being implemented through any national law in parliament, “which has certain difficulties at the moment”, but by creating a model for each of the 29 states in India to implement as they wish. “If one state starts implementing them straight away, the benefits will be there for everyone to see and that will attract other states to do the same. That is the model that will work in India, and such reforms are on track. The industrial set up, the government and the people are constantly thinking of innovating ideas and making it easier to do business in India,” he said.
Bid to clear investment hurdles
The UAE is already India’s third-largest trade partner and home to nearly 2.6 million Indians, while India is the UAE’s second largest trading partner. The two countries aim to increase bilateral trade — which stood at $60 billion (Dh220 billion) for 2014-15 — by 60 per cent in the next five years. At the end of Indian Prime Minister Narendra Modi’s visit to the UAE last August, both countries also announced a $75 billion fund to invest in Indian infrastructure, mainly to support the expansion of its network of railways, roads, airports and industrial corridors, while Modi sought $1 trillion in investments from around the world in the Indian economy.
The hurdles that investors from the UAE and the rest of the world have faced — mostly related to regulations and the business climate — are now being ironed out to facilitate smoother investments in the world’s fastest growing economy, Seetharam said.
“People who have traditionally shunned India as an investment destination, possibly because they have faced so many hurdles and perceived a climate of protectionism, can now take comfort in the fact that those hurdles are being removed,” he said. “The recent announcement by the Indian government on Start Up India is really promising — people can register their company simply through an app or online, there will be no government inspections or taxation for the first three years of the business — these are all new concepts in India. The government’s story in the past was that it used to take a very a long time in registering a start-up in India, and then if it didn’t do well it took an even longer time to close the business,” he said. The start-up initiative also offers great opportunities for small and medium enterprises (SMEs) based in the UAE, he said.
The Make in India initiative, unveiled by the Indian government in 2014, is also driving a change in the culture of doing business, according to the ambassador. “I am not saying everything is perfect, but we are going in the right direction.”
At an India-UAE High Level Task Force on Investment meeting in Abu Dhabi last year, both sides had agreed to expand the UAE’s participation in infrastructure projects in India.
“The hurdles of doing business need to be ironed out in India’s own interests,” Seetharam said. “India is a huge country and for it to turn around overnight is not reasonable to expect. However, some trends in the industry are very promising. One is the intense competition between states to attract investments. Some states have carried out reforms faster and more efficiently than others. These states offer a business-friendly climate, a single-window clearance system for investments, make it easier to procure land for businesses, ensure the right infrastructure — these are very healthy trends.”
Allaying tax terrorism fears
On the controversy surrounding the now-discarded proposal for retrospective taxation in India, as well as the scepticism of foreign companies to be able to repatriate their funds following business disputes, Seetharam said: “Those were the big stories of the past. This government has made it very clear that such things will not happen. The mood of the investors is improving and there are lots of opportunities in India to get reasonable results. In renewable energy for instance, the cost of solar energy has come down from Rs18 per unit to Rs4. The market is constantly growing while India is starved of energy. Similarly in every other industry, investors will look at the bottom line and assess each project based on its commercial viability and its profitability. Therefore we expect the UAE to invest in India not for political reasons but for very solid business reasons.”
Both the UAE and India share almost equal proportions of their total bilateral trade, which is now worth $60 billion annually. “The overall economic relationship is therefore very healthy and promising — and of course much more can happen to make those numbers go up further,” he said.
Ease of doing business
Speaking about the UAE-India Infrastructure Investment Fund worth $75 billion, Seetharam said there were various ways in which the funding targets would be met. “Some investments will come from sovereign wealth funds such as the Abu Dhabi Investment Authority (ADIA), but a lot will also be through private enterprise. For example, private investors and public sector institutions from the UAE will be among those participating at the Make in India Week that starts in Mumbai from February 13. While India is doing well in the services sector, we are lagging behind in manufacturing. So this initiative provides an excellent opportunity to create millions of jobs, and this is where we expect a strong participation of UAE investors.”
Another mechanism to attract foreign investment was through India’s newly established National Investment and Infrastructure Fund (NIIF), Seetharam said. “Here the focus is on institutions — not so much on the companies but sovereign wealth funds and financial institutions. Major funds from across the world, including from the UAE, have been invited to invest either directly into the NIIF or participate in investments which are financed by NIIF.” The new rules also allow the option for investors to create their own alternative investment fund for individual projects, not necessarily funded by the NIIF.
“These are some of the ways in which $75 billion will find its way into the economy. There is already significant investment from the UAE in India’s infrastructure, education, health care, logistics, energy and IT sectors. The Dubai Government, for instance, has invested in the Kochi SmartCity project — which has now been completed. Such a project is happening in an environment today where we are talking about building 100 Smart Cities across India, including in Kochi itself. So the general mood is upbeat and investments are already happening — there are whole lot of opportunities to benefit from.”
Visa on arrival for investors
Speaking about improving the ease of doing business in India, Seetharam said: “There is also some talk about providing business visas on arrival starting with certain nationalities. Obviously the government is thinking about streamlining the visiting process for businessmen and investors. I guess when that happens, sooner or later, it will also apply to the UAE.”
India currently offers an eTourist visa for Emirati citizens and 42 other nationalities, which needs to be applied for at least four days prior to the travel date, but does not have any provision for visas on arrival.
“Making the visa process easier is an important issue for us. If for instance we see a lot of investment from the UAE in the hotel and travel industry, then you will find that this process will attain a different level altogether. There would be more frequent visits and promotion of destinations in India here in the UAE. There are many Indian expats who run hotels here in the UAE, while many companies from here are looking at acquiring or setting up hotels and travel businesses in India — this is the kind of synergy that goes a long way in consolidating relations and boosting the tourism sectors of both countries. I also see this kind of synergy in many other sectors,” he said.
More seats likely for UAE carriers soon
Speaking of the strong growth in the bilateral aviation sector, Seetharam said there would always be the possibility of greater seat allotments for UAE-based carriers as Indian airports modernise themselves and offer better capacities.
“For UAE-based airlines such as Emirates and Etihad, there is a strong travel demand from the Indian subcontinent which they are able to cater to. The stake acquisition by Etihad Airways in India’s Jet Airways, for instance, is a win-win deal for both sides. It has helped Jet Airways with connectivity and raised its profile, while Etihad has gained in the number of passengers it can now route through Abu Dhabi. Air Arabia also operates a large number of flights between the Sharjah and India. These are very positive signs and the demand in the bilateral aviation sector can only go up in future. As key airports in India improve, there will always be the scope of enhanced seat allotments between the two countries.”
Admitting that India had a long way to go to match the number of tourists who visit the UAE from the subcontinent, the ambassador said: “Right now the flow is the other way round. Nearly 1.6 million Indians visited Dubai last year, up from around 1 million earlier. These are impressive numbers, considering Dubai gets about 14 million tourists every year. From shopping to buying gold, Indian tourists are all over the place.”
Challenges in tourism sector
Welcoming the inflow of Indian visitors into the country, Seetharam said: “We would also like to see more people travelling from here in the UAE to India. Our visitor numbers from the UAE are quite modest now, but all the ingredients are there to make it much better. One of the major steps is the introduction of the eTourist visa. This system is now working quite well though the numbers are quite small — in a month perhaps up to 3,000 people apply from the UAE. But if you look at the total number of tourist visas issued last for India from the UAE, it’s around 50,000 — which is a very small number. That has the potential to go up much more.”
While India has a wealth of destinations to offer to tourists of every interest and budget, the ambassador said there were several factors behind the low number of UAE residents visiting the country. “We have nearly 1,000 flights every week between UAE and India, the distance is short and India has a lot to offer in terms of diversity of destinations — so these are favourable ingredients. But there are also negative factors which impact tourism. For instance, when severe floods hit the southern Indian city of Chennai last year, there was a sudden drop in tourist numbers not just in southern India but all across. It’s like saying there are floods in southern Italy so let’s not go to Paris.”
The key, according to him, lies in building awareness about the niche requirements of UAE travellers — with a focus on the luxury and ultra-luxury segment. “Travellers from the UAE are more interested in staying at historic palaces and heritage properties and in extreme adventure tourism rather than lazing around on beaches. Some travellers just go to watch the rains or get an Ayurvedic massage in Kerala. So we need to work more towards building that awareness,” he said.
