UAE continues to be among the fastest growing economies in the world and offers great business opportunities for investors around the globe, particularly India. UAE is considered as major investment hub for Indian businesses and over the past few years’ number of Indian funds into UAE has increased substantially.
For India, UAE is quite significant as it provides commercial and logistics gateway for global trade and investment between major continents: Asia, Europe, Africa and Middle East.
Promotion of Bilateral Ties at Official Level
Business and trade between India and UAE is being promoted at an official level. In January 2017, Crown prince of Abu Dhabi Sheikh Mohamed bin Zayed Al Nahyan visited India and both countries signed several agreements and Memorandums of Understanding (MoUs). They included,
Comprehensive strategic association between India and UAE
Oil storage and management between Indian Strategic Petroleum Reserves Ltd and Abu Dhabi National Oil Company
Scientific development and mutual support in cyber space between National Security Council Secretariat and National Electronic Security Authority of UAE
Liaison in Defense Sector
Institutional association on Maritime Transport
Collaboration in road transport and highways sector
Joint assistance in the field of small and medium enterprises and innovation
Ways to improve trade in order to increase cooperation in areas of joint interest
Bilateral Trade between India and UAE
India and UAE have very strong and multifaceted bilateral ties with regular high profile visits as mentioned above in order to uplift the relationship into comprehensive strategic partnership. According to Confederation of Indian Industry,
- Bilateral trade between India and UAE stands at $53 billion in 2016-17,
- India is the largest trading partner of UAE
- India ranks 3rd among countries that export goods to UAE
- 2% of total imports in UAE are from India
- Trade between India and UAE is forecasted to reach $100 billion by 2020.
- 6 million Indian community reside in UAE thus constituting as the largest expatriate group in UAE
- According to UAE Bureau of Statistics 2015, India is third major investing country in UAE in terms of FDI (Foreign Direct Investment)
- Major FDI sectors from India to UAE are transportation and vehicles, food processing, information technology and energy sector.
India-Largest Non-Arab Investor in Dubai Real Estate
UAE, especially Dubai attracts huge investments from India in real estate sector due to diverse investment options and appealing environment for real estate business. According to Dubai Government Land Department, India is the largest non-Arab investor in Dubai real-estate. Property price in Dubai is way cheaper than in India. Also, Dubai is like a second home to Indians; more than 35% of population of Dubai is Indian, according to Economic Times India Times.
Burj Khalifa; world’s tallest building in Dubai comprising of more than 160 stories, has its most number of apartments owned by Indians. Talented pool of India come here for job opportunities and businessmen look for real estate investment opportunities as it is difficult for them to do business in India due to trade union issues and restrictions on using land.
UAE real estate sector is good option for investors having long term outlook as Dubai is on its course in becoming global metropolis and properties will appreciate in 2020 because of World Expo 2020 taking place in Dubai.
Direct Currency Transaction between India and UAE
In a move to boost bilateral trade, governments of India and UAE recently signed an agreement to remove “middle currency (dollar)” and transact directly in each other’s currencies i.e. dirhams and rupees.
The agreement will benefit businesses of both sides in terms of savings, direct business transactions and also make trade between two nations more competitive. Lending rates will also come down and payments will be quick thus improving liquidity.
Future Agreements to Boost Trade
During the visit of Indian prime Minister to UAE in 2015, an agreement was signed to setup $75 billion mutual fund to invest in infrastructure projects. The major areas of focus include security, defense, space technology and energy.
With the target to increase bilateral trade between India and UAE by 60% in next five years, we can expect 12% increase in bilateral trade expansion in 2018.
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