India’s commerce minister Piyush Goyal said a bilateral trade deal with the UAE could be concluded by the end of this month.
“We are working on a mutually beneficial, win-win agreement for both parties, providing market access for both countries,” said Goyal. “Hopefully, by the end of this month or middle of next month, we hope to conclude that – it will probably be one of the fastest trade agreements between countries.”
India and the UAE launched negotiations around a comprehensive economic partnership in September and the deal will include a broad range of sectors.
Goyal said the new agreement will give a big boost to services sectors such as tourism, hospitality, medical and travel. The minister added that clean energy, real estate, construction and logistics will also see significant investments. “There are also some significant announcements that we are working towards.”
Dr. Thani bin Ahmed Al Zeyoudi, UAE’s Minister of State for Foreign Trade, said even under a worst case scenario, a trade agreement between the two countries will give a definite boost to investment flows and exports between the two countries.
“We are at an advanced stage in the negotiations and almost 95 per cent has been closed,” Al Zeyoudi.
Onus on businessmen
Goyal added that once an agreement is signed between the countries, it would be up to businessmen and investors to make full use of the opportunity.
“Our governments can create a framework, we can provide a platform – end of the day, it is up to the businesses to take advantage of the opportunity,” said Goyal. “UAE is one of our largest trading partners. Therefore, it was very natural for us to look at bringing together businesses and investors of both the countries.”
Not just incremental
Goyal said India and UAE are not just looking for “incremental” growth in trade. That “is not what we are looking for, we want the double-digit trade to go into the triple digits”.
India-UAE trade, valued at $180 million per annum in the 1970s, was valued at $59 billion in 2019. UAE was also India’s second largest export destination, with an amount of nearly $29 billion for the year 2019-20.
“We have very ambitious targets ahead of us and we have the desire to bring prosperity to 1.3 billion Indians,” said Goyal. “India is expanding very rapidly towards expanding trade and partnership.”
Work week change
Apart from aligning the UAE with global markets, Al Zeyoudi said the shift to a 4.5-day work week will encourage UAE’s residents and nationals to go out and spend more.
“We are always looking at how we can be more attractive to global markets,” said the UAE minister.
Source of capital
UAE, home to large sovereign wealth funds and well-established businesses, is a source of funding for India’s large startup ecosystem, which is churning out 3-4 unicorns per month. “UAE has a large pool of capital that we hope to bring to India,” said Goyal.
UAE, which is home to around 3.3 million Indians, is a “special” place for India and, historically, a large trading partner, added Goyal.
A potential agreement comes after COVID-19 brought India’s economic growth to a halt. “India did go through significant challenges during the last two years, (with) the COVID-19 pandemic having its impact on the Indian economy,” said Goyal.
“We contracted last year due to the very severe lockdown put in place last year,” said Goyal. “This year we have been able to largely recover.”
Multiple analysts have raised their projections for India’s economic growth in the current fiscal year due to pick-up in consumption and dwindling COVID cases.
UAE is back
The UAE has also bounced back from the impact of the pandemic with Expo 2020 Dubai renewing investor interest. Tourism, a major pillar of Dubai’s economy, has also returned with the emirate registering roughly five million visitors between January and October this year.
“Our economy has increased in the right direction and our exports in the first three months rose,” said Al Zeyoudi. “We are also one of the top countries when it comes to the COVID resilience ranking.”