The future is looking better than ever for the two countries as India and the UAE formalise their economic ties By G. Kalyan Kumar
A golden period beckons in the United Arab Emirates (UAE)-India relations with the spectrum of cooperation widening with an oncoming free trade agreement, likely to be signed in the first quarter of 2022.
The spadework on the proposed agreement is underway. In September, India’s Commerce and Industry minister Piyush Goyal and UAE minister of state for trade Thani bin Ahmed Al Zeyoudi met in New Delhi and discussed significant matters on trade expansion.
The UAE is home to 3.5 million Indian expatriates constituting roughly about 30 percent of the country’s population. The UAE is also India’s second-largest export destination and third-largest trading partner. During a joint press conference, Goyal said the two nations wanted to sign a formal India-UAE Comprehensive Economic Partnership Agreement (CEPA) by March 2022. Goyal added that both UAE and India are looking to cross $100 billion in merchandise trade while mentioning that both sides have drawn up an “aggressive and ambitious” time frame to conclude the trade agreement. Specifically, the pact will raise bilateral trade in goods to $100 billion and services to $15 billion within five years of signing the agreement.
UAE excited about the trade agreement
Minister Zeyoudi stated UAE’s excitement about a trade agreement with India that could boost bilateral trade. He noted that in the first half of 2021 alone, the total volume of non-oil trade between the two sides hit $21 billion.
The ministers underlined the need to promote bilateral cooperation under the ambit of the 2017 MoU on cooperation and trade remedies. India’s focus on the extended neighbourhood has paid off strategically in the widening collaboration with the UAE. In 2019-20 the two countries clocked close to $60 billion in bilateral trade.
India in Expo 2020 Dubai
Meanwhile, India has established a significant presence in the Expo 2020 Dubai, which kicked off on October 1, 2021. Economic experts predict the mega-event to further stimulate bilateral trade and investment. Here, India showcases its ‘unlimited opportunities for the global community’, telling the growth story and inviting all to benefit from it.
The India Pavilion in the 2020 Expo is parading an innovative kinetic facade with 600 colorful blocks of rotating panels bearing the theme – ‘India on the Move’. It has attracted participation from 15 Indian states, nine central ministries, and centrally ruled union territories, who have lined up B2G and G2G meetings. The states include Gujarat, Rajasthan, Maharashtra, Uttar Pradesh, Himachal Pradesh, Haryana, Kerala, Karnataka, Telangana, Jammu and Kashmir, Goa, Ladakh, Andhra Pradesh, Chhattisgarh, and Jharkhand. Their culture, food, and business opportunities are on vibrant display at Expo 2020.
Among the top Indian companies participating in the Expo 2020 include Reliance, Tata Group, Adani, Vedanta, Hinduja Group, and L&T, not to mention several UAE-based Indian investors such as Lulu group, Malabar Gold, IFFCO, KEF Holdings, and Aster, among others.
Other participating Indian organizations include Hindustan Unilever Limited, ITC, Air India, ICICI Bank Patanjali, Dabur, Oyo, Trident Group, Baidyanath, Apollo Hospital, Sun International, Ease My Trip, MIKO, Daawat Rice, Bank of Baroda, BLS International, NPCI, Jagran Lake City University, Petrochem, Nikai, Al Dobowi, and Shycocan.
India’s export basket
According to data, India exports petroleum products, textiles, engineering and machinery products, chemicals, stones, gems and jewelry, precious metals, minerals, food items including tea, meat, seafood, cereals, sugar, fruits, and vegetables to the UAE.
India’s imports from UAE cover petroleum and petroleum products, minerals, chemicals, wood products, precious metals, stones, gems, and jewelry.
UAE has been one of the largest investors in India, with investments worth $11 billion as of March 2021. According to official data, many Indian companies have made considerable investments in the UAE and the total value is around $85 billion.
Dubai property luring Indians
UAE’s long-term residency visas have excited Indian investors seeking housing properties in the UAE. According to reports, Indian HNIs continue to be the top investors in Dubai.
In a major reform, the UAE government decided to grant long-term residency visas to professionals and investors. Property consultants identify this as a key driver in rising investments in residential properties of Dubai.
Under the new visa regime, UAE will offer long-term premium visas spanning five to ten years, targeting entrepreneurs, professionals, and specialists in technical, medical, scientific, and research areas.
Abu Dhabi too is now an emerging attraction for property investments. According to property consultants, many Abu Dhabi developers, including Aldar, offer viable rental schemes to boost property purchases. In addition, the advent of tourist attractions such as Yas Island and Ferrari World has also escalated housing demand in Abu Dhabi.
As per an Anarock consultancy official, which caters to Indian property investors in the Middle East, Dubai has one of the most affordable markets in luxury housing compared to any other world city. A spokesman of a Delhi-based property consultancy also confirmed the surging demand from Indian investors in UAE housing. They include cash-rich businessmen and wealthy professionals.
In terms of market segments, the demand is highest for luxury properties especially in locations like Palm Jumeirah. The sought-after price range is INR 20-60 million, which is equivalent to $266,500 to $800,000.
GCC ties growing
India’s relation with the Gulf Cooperation Council (GCC), which comprises of UAE, Saudi Arabia, Oman, Bahrain, Qatar, and Kuwait, is also on the upswing. The fillip in GCC ties has been prominent since 2015, reflected in trade, investments, and security cooperation.
However, a gap induced by the curtailed economic activity from the COVID-19 pandemic wave needs to be bridged. The slashed growth momentum led to a slight decline in the total trade between India and GCC recently. In April and October 2020, business came up to $39.98 billion, amounting to GCC share in India’s foreign trade at 12 percent, in contrast to 33 percent in the same period during 2019-20. Today, India imports 38 percent of its oil requirements from GCC.
It is apparent that trade and investment opportunities are booming across India and the UAE. Now the onus is on business owners, industry, and the officials to facilitate its optimum leverage.