Dubai: With a population of a mere six million, the UAE has emerged as the largest trading partner of India — a country of more than 1.1 billion people.
Two-way trade between India and the UAE rose to $44.5 billion (Dh163.45 billion) in 2009, according to Indian government statistics.
In the list, the UAE topples the United States, China, Russia, Japan, Germany, France and the United Kingdom — countries which export machinery, vehicles, aircraft, defence equipment and all sorts of products to growth-hungry Indian economy.
"It is simply amazing, considering the fact that more than half of the UAE population is blue-collar workers and the country is not considered a major manufacturer of industrial and agricultural products. Yet it has become India's largest trading partner. This is thanks to the strong and sustained economic ties between the two countries and the joint efforts of the private public partnership in which the Indians living in UAE have taken a very active part," Paras Shahdadpuri, President of the Indian Business and Professional Council (IBPC), told Gulf News in an exclusive interview.
"This reflects the relatively strong position of the UAE and its role as an important hub for servicing the neighbouring economies."
He said Indians are the largest group of investors in the UAE and own the highest number of businesses compared to other nationalities.
Shahdadpuri, a diplomat-turned businessman, has been leading the Indian business and professional community — the largest in the country — for nearly two years. He is playing an important role as IBPC president in helping to strengthen bilateral relations between the two countries.
In an interview Shahdadpuri, who also owns famous electronics and home appliances brand Nikai, expressed his views on the overall economic situation of the UAE. Unlike others, he has come up with some valuable solutions. Excerpts…
Gulf News: What is your view of the current economic situation?
Paras Shahdadpuri: Things are currently looking up in most sectors of the economy. I believe the worst is behind us. 2009 and 2010 have been very challenging years for businesses. Except for the real estate and construction sector, most of the sectors are showing determined and distinct improvement. Tourism has picked up and hotel occupancy has improved. Statistics announced by the Government show growth in real and nominal GDP of UAE. The leadership of UAE is robust, forward looking and proactive and this is reassuring for the business community.
I have no doubt that trade and business are bound to grow in the years to come.
What steps could help boost investor confidence?
A long-term residence or business visa would be an encouraging factor for investors. A long-term visa will inculcate a sense of permanency in investors' minds that will help them invest more in the UAE.
Renewing your residence visa every three years, after a health check-up, does not give a good feeling. Businessmen and professionals' visas have rarely been refused, if their records are clean. Then why subject an investor to renew it every three years? It's a hassle. If anyone violates the rules of the country, he can always be sent back, irrespective of the length of his visa!
This will boost investor confidence and enhance the investment climate further.
Dubai's late Ruler Shaikh Rashid had a strong vision to attract foreigners and make them feel at home. He believed that if people lived here they would bring in their skills, intellectual strengths and investments to grow the economy. We are so fortunate that the successive leadership has continued his vision. And you could see the growth and the results for yourself.
The UAE is currently revising the Commercial Companies Law and planning to issue Investment Law and Bankruptcy Law. How do you see these affecting the investment climate?
These are bound to improve the investment climate in the UAE. These proposed laws have been overdue for many years.
The 51:49 partnership, as all authorities well know, is an unreal arrangement. It is well known to all that in most of the cases, the foreigners have invested 100 per cent of the funds, they manage the company and enjoy de facto full ownership of the limited liability companies and the Emirati "partner" is paid a nominal amount. The current arrangement can be a source of insecurity to an investor. In the same way, it is difficult for an Emirati investor to place money and management with a foreigner whom he does not know.
It is therefore high time that the government changes the law appropriately to provide ownership to the foreigners in proportion to their capital and profit shareholding. In the event it is found difficult to do so, then my personal suggestion would be to make the Emirati partners as "Service Agents" against a fee, while allowing 100 per cent ownership to the real investor. This will also provide a regular income stream for the Emirati nationals while offering legitimacy to the investor.
What else do you think could help?
The UAE should step up its marketing and public relations efforts. They need to go out and promote the world class facilities which exist in the UAE. There should be a strong and consistent move to attract investment across the country.
The government should appoint spokespersons dedicated to various important departments who can portray the real picture of the economy and other issues of concern to the business and professional community. This will stop conjecture by people and disseminate the correct and credible information.
There are two sides to any problem — the real one and the psychological one. Real problems may take their own time to correct, but we can improve the psychological aspect by giving the correct picture on various aspects. Lack of information is a breeding ground for rumours. That would be harmful. There are many positive developments taking place which need to be properly marketed.
I believe that dissemination of correct information will help in a great measure.
How do you see the property ownership linked residence visa? Will it help?
Globally, property ownership and visas are not linked — these are two different things.
It is up to the government to consider flexibility in rules if they feel that the real estate sector needs propping up.
You seem to be optimistic about the outlook of the economy. What are the reasons?
Infrastructure. It is the best in this entire region and one of the best in the world. Paper formalities in setting up a business and getting permission and other formalities are minimal. On the trade side, customs documents are processed very fast and you do not see such efficiency in port handling elsewhere. General facilities and support of various government departments to the businesses are excellent in UAE. Besides, costs of doing business have somewhat reduced as rents have subsided due to oversupply of office space and residential units. Inflationary pressures are also low. The UAE is regaining its competitive edge.
So, Dubai and the UAE would be the natural choice for investors planning to enter this region.
How do you see trade relations between India and the UAE? What do you think needs to be done to improve this?
India is the No. 1 trading partner of UAE whereas the UAE is India's top trading partner. There are comprehensive and very strong historical, cultural, political and economic aspects to it. The two are strong economic partners. India and UAE are a role model for international bilateral relationship.
However, I do not see this comprehensive relationship reflected in the exchange of state visits between the two countries. It is a long time ago that the Indian prime minister last paid a visit to the UAE. Decades ago.
So, there should be more frequent exchanges of official visits by heads of state and other political leadership to strengthen the existing relations.
What is your organisation doing to fix this?
We are encouraging bilateral trade and business missions, trade fairs, stronger participation in events and roadshows and host delegations to help Indian companies make inroads into the Gulf markets. We want to encourage bilateral investments and increase trade flows both ways. To be No. 1 trading partners has been the culmination of constant and consistent efforts by all stakeholders, including IBPC. As they say, to reach the top is great, but to sustain the No. 1 position is a greater challenge. All stake holders in UAE and India cannot afford to be complacent. We need to be innovative and take fresh initiatives.
In this context, I am planning to form a core group of prominent UAE and Indian businessmen to create a joint team that will work closely to give impetus to trade and investment growth.
What about creating a joint chamber of commerce for emirate and Indian business communities?
Yes, this is a good idea and we would like to consider this initiative which can play a greater role in promoting business links between the two countries.
You said UAE-India trade will continue to grow. What makes you say that?
The India-UAE trade and economic relations are deeply founded on strong fundamentals for decades. These economic relations are not a flash in the pan. We need now to build more on this strong foundation. Trade between the UAE and India is not restricted within the boundaries of the UAE. The UAE is a feeder destination for the rest of the GCC region and beyond which is doing very well given stable oil prices. UAE has vast hinterland.
The Indian economy is poised to grow 8.5 per cent annually and that will have a knock-on effect on the UAE, after all, both countries being biggest trading partners of each other. The infrastructure and connectivity that the UAE, and especially Dubai has, will help in this growth.
The UAE leadership is very forward looking. The UAE has a very business and investment friendly environment.
This will encourage Indian businessmen who are looking outward for investments, particularly in GCC. Bharati Telecom's huge investment of about $10 billion in Kuwaiti Zain company is testimony to this direction. There are similar investment opportunities in the UAE. With its fast growing and large $1.3 trillion economy, India has also emerged as a hot spot today for attractive returns on investment for UAE investors. In my opinion, undoubtedly, the bilateral economic and trade between the UAE and India is poised to grow, Insha Allah.
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