Trade and investment between India and the UAE is likely to exceed $75 billion (Dh275.4 billion) in 2013, even as plans for an official visit by Prime Minister Dr Manmohan Singh remain uncertain, according to India’s Ambassador to the UAE, M.K. Lokesh.
“Since the formation of the UAE, India’s interests in the country have multiplied. Currently, the UAE is India’s largest trading partner, a major oil supplier and a significant investor,” the ambassador says in his Independence Day message today. “Trade and investments will continue to be the engine, that will drive the bilateral relations. Bilateral trade, which reached the level of $75 billion last year, is expected to increase further during the current year.”
Prime Minister’s visit
Trade between the two countries has grown from $180 million in the 1970s and encompasses precious metals, stones, gems and jewellery, petroleum products, minerals, food items, textiles, engineering, machinery, chemicals and wood.
The relationship will be given a boost by the visit of Dr Singh later this year. Plans are in the pipeline, says Lokesh, but no confirmed details are as yet available. In the past too, the UAE has hosted high profile Indian visitors such as Finance Minister P. Chidambaram and External Affairs Minister Salman Khurshid, among others.
As the second fastest growing economy in the world, India is one of the most attractive destinations for foreign direct investments (FDI) in Asia. With a cumulative FDI inflow of $2.3 billion to India, the UAE ranks tenth among the top investing countries. The UAE’s investments in India are concentrated mainly in five sectors: power (15 per cent), metallurgical industries (12 per cent), construction development (11 per cent), services sector (10 per cent), computer software and hardware (5 per cent).
Lokesh says India hopes to attract new funding from the UAE. “As conveyed to the UAE government from the highest levels in the Indian government, we would like to see more investments from the UAE in the infrastructure sector. Most of the existing investments from UAE companies in India are indeed in sectors such as ports, power, civil aviation, hospitality, etc., which has benefited our infrastructure,” he says in his address.
Roadblocks in the trade relationship between the two nations are currently being tackled head-on at high levels through the setting up of a High Level Task Force on Investments (HLTFI).
The first meeting of the India-UAE HLTFI, which was formed in 2012, was organised earlier this year in Abu Dhabi and an agreement was reached between the two countries on the format and structure of future discussions. Both the countries decided to establish sub-committees in areas such as infrastructure, energy, investment and trade, manufacturing and technology, aviation and transport for investment purposes. The signing of the MoU on Civil Aviation Cooperation significantly increased the number of seats for Indian and Abu Dhabi airlines and is expected to benefit consumers, the ambassador says.
“India and the UAE are also working to finalise the Bilateral Investment Promotion and Protection Agreement (BIPPA), which will drive investments in India from the UAE,” adds Paras Shahdadpuri, President, The Indian Business & Professional Council (IBPC), Dubai. As part of the economic reforms programme initiated in 1991, the foreign investment policy of the Government of India was liberalised and negotiations were undertaken with a number of countries to enter into BIPPAs, which protect interests of investors on the reciprocal basis.
“To spur foreign investments, the government of India is also paying attention to resolving challenges that UAE investors undergo in India,” he adds.
The ambassador also addresses the current investment climate in India. “No doubt, there is need to generate more confidence among UAE investors about India as a destination for investments to realise the full potential that exists. The joint efforts in this regard will continue,” Lokesh says.
Future areas of co-operaration include conventional and renewable energy, he adds. “These are areas where the UAE has been a strong and pioneering force and India stands to gain by joining hands with it,” the Ambassador says.
Aviation also remains a sector to watch, following Etihad Airways’ decision to invest $379 million in Jet Airways for a 24 per cent stake. “If this deal comes through, a lot of new opportunities will rise in the aviation sector,” Shahdadpuri says.
Indian companies also invest in the UAE. Major Indian companies have made sizeable investments in principal sectors of the UAE economy, including construction, power, health and wellness, engineering, consulting and infrastructure. The UAE also sees strong participation of Indian companies in the aviation, petrochemicals and electronics sectors.
Pension scheme
With a population of around two million, Indians make the single largest expatriate community in the UAE. “The backbone of the relationship is the presence of the large Indian community whose constructive role is acknowledged in the UAE society. The community also forms a strong bond between the two nations,” Lokesh says, adding that the welfare of the community, especially the interests of the working class is always at the forefront of the activities of the embassy and the consulate. “We would launch the pension scheme for workers and will continue to work with the UAE government to improve the process for recruitment of Indian workers to protect them from unscrupulous elements,” he says.
Indian expatriates have made a valuable contribution to the growth of the UAE’s key industries. “The Indian diaspora is dedicated, sincere, peace loving and hardworking with high intellectual capacity. Indian expatriates also make great contributions in India in their various fields of interests,” says Dr Azad Moopen, Chairman and Managing Director of DM Healthcare Group.
Firoz Merchant is Chairman, Pure Gold Jewellers, a leading player in the jewellery sector in the UAE, attributes his success to the bustling business environment and infrastructure in the Emirates. “We are present in ten countries with 125 stores, but the UAE remains our biggest market,” he says.
“With growth in the tourism and hospitality sectors and the government initiatives to boost retail trade, we are very positive about our business outlook for the UAE market,” he adds.
Joint collaborations
Many of these Indian players are now looking to grow their markets of origin. After consolidating its business in the UAE and other GCC countries, the UAE’s home-grown brand Joyalukkas now plans to tap potential in the burgeoning Indian retail sector.
“I started my first showroom in the UAE and I owe all my success to the UAE. We have plans to open 19 new showrooms in India in the current financial year,” says Joy Alukkas, Chairman and MD, Joyalukkas Group.
DM Healthcare Group is now looking at India as a major opportunity to go forward in the next 15 to 20 years.
“Much of the Group’s investment in India has been concentrated in Kerala, but now we are moving to other areas. Our expansion in India will be based on a hub and spoke model in tier II and III cities. We are aiming to have 4,000 beds at our health facilities by 2015,” says Dr Moopen.
Both countries are now moving ahead with a number of joint initiatives to strengthen their relationships in the political, economical and cultural sectors. “Now we are all looking forward to the visit of Dr Singh to the UAE later this year,” Shahdadpuri says. From here, this relationship can only get better.
