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UAE sees huge potential in economic co-operation with India

UAE-India economic co-operation is set to reach record figures in trade exchanges. (File)

By Wam

The UAE-India economic co-operation is set to reach record figures in trade exchanges due to the huge potential in both countries.

Economic circles stress the need for the UAE to step up its trade and economic ties with India, which is a huge market with a population of over one billion. Given a number of factors, notably political stability, India has become a hub for foreign investment.

India's trade relations with the UAE date back thousands of years, beginning with the barter of pearls for cotton and dry fruits for grains. The business ties have grown stronger out of centuries of exchange of culture, commodities and ideas.

The Ministry of Economy said in a report on the volume of foreign trade between the UAE and India from 2012 to 2014, that the trade balance tilted towards India as the UAE's contribution to foreign trade was 38.9 per cent, while India contributed 61.1 per cent. Imports were 12.4 per cent, while the total volume of exports were 31.9 per cent between 2013 and 2014.

It added that India could absorb all national products of the GCC in general and the UAE products in particular, which compete in quality with foreign commodities.

The ministry said that economic co-operation opportunities and the setting up of joint ventures between the UAE and India are possible in various fields. Each economic sector can provide an opportunity given the availability of expertise, modern technology, funds and energy. These are all important factors for both partners.

The report said the number of Indian companies, agencies and trademarks registered at the ministry at the end of 2014 stood at 4,365 companies, 177 trade agencies and 5,579 trademarks.

It referred to the Framework Agreement on Economic Cooperation between India and the Gulf Cooperation Council (GCC) signed in August to explore the possibility of setting up a free trade zone. It was a qualitative trade exchange shift between the two parties. The GCC states are important trade partners of India. Their exports to India constitute more than 11 percent of the total imports. This deal is key for comprehensive co-operation between the two parties in all fields.

The ministry called for co-ordination between the two parties regarding issues presented to the World Trade Organisation (WTO), especially issues of mutual concern.

The report urged both parties to continue co-operation in the areas of SMEs, calling for the setting up of joint projects in the areas of IT, computers and subsidiary industries to meet the needs of local and regional markets, and making use of advanced Indian technology in these fields.

It stressed the need for organising trade fairs to showcase national products, citing the success of the UAE Trade Exhibition, which was held at Nehru Centre in Mumbai in December 2015.

The report said the co-operation between the Department of Tourism and Trade Marketing and the Jebel Ali Free Zone Authority has attracted a number of Indian businesspersons and investors from different economic sectors.

India is the UAE's largest trade partner. The UAE's economic, political, and cultural links with India date back to more than a century ago when bilateral trade began. The Indian community is the largest expatriate community in the UAE. The UAE's other major trade partners are China, the United States, the United Kingdom, Germany, Saudi Arabia, Indonesia, Iran, Oman, and Jordan. As such, trade is predominately concentrated in Asian markets.

The total trade volume between the UAE and India in the fiscal year 2010-2011 stood at $62.4 billion compared to $43.5 billion in 2009-2010, up 43.6 per cent. The UAE ranked the 10th largest investor in India. UAE investments in India from 2000 to 2010 stood at $1.82 billion. The UAE's cumulative investments in India exceed $6 billion.

The report said that India is preparing a new investment programme that allows 100 percent foreign direct investment in the renewable energy sector. This will open new horizons for co-operation between the two countries.

The two countries are looking forward to increasing the trade exchange by 60 per cent to $100 billion (Dh368 billion) by 2020. The two parties also seek to increase flights to over 950 weekly, as the Indian community in the UAE has reached over 2.5 million, the largest community in the UAE.

The UAE also eyes investments in important sectors such as construction, energy, metal industries and modern technology, as well as education, medicine, tourism, cement industry sectors and others.

The ministry stressed the need for benefitting from the agreements signed by the two countries to facilitate participation of Indian companies in the infrastructure development projects in the UAE and support the strategic partnership in the energy sector through the UAE's participation in developing the strategic oil reserves, exploration, production and marketing of oil in India.

The joint UAE-India projects could benefit in marketing products of these projects in Arab countries with a population of 300 million within the Arab Free Trade Zone Agreement, which allows the flow of goods with Arab sources to other Arab countries without fees or customs restrictions.

The Avoidance of Double Taxation Agreement in 1992 and Economic Cooperation Framework Agreement were signed with India as part of the GCC in 2005. Nine meetings have been held, of which the last one was in June 2007 in New Delhi.

The two countries also signed a Memorandum of Understanding on the workforce, with the aim of recruiting Indian workers to work in the UAE in accordance with all legal, just and transparent procedures.

On April 21, 2013, Federal Decree No. 17 for the year 2013 was issued for ratification of the second protocol to amend the agreement between the UAE and India on the Avoidance of Double Taxation and Prevention of Fiscal Evasion.

On November 13, 2013, the UAE and India also signed the Agreement on Protection and Encouragement of Investments. They also inked on January 10, 2014, the Air Transport Agreement, which allows certain national carriers in both countries to conduct regular flights as agreed by the two parties.

A number of Memoranda of Understanding were signed in various fields, including food sector, standardisation and metrology, telecommunications, higher education, human resources, tourism and trade.

The GCC and India held two rounds of talks with India, of which the last was in September 2008, in Riyadh. It focused on the issues covered by the free trade agreement.

The UAE and India agreed to benefit from small and medium enterprises to establish an important trade sector. India was ranked seventh with regard to cumulative direct foreign investments in the UAE. These investments include financial, wholesale trade, construction and industrial sectors, in accordance with the National Statistic Centre of the UAE.

Mutual trade and economic co-operation between the two countries has received a boost through mutual visits of senior officials.

The report referred to the role of UAE telecommunications companies in India, saying that Etisalat entered the Indian market in 2008 through a trade partnership with the Indian local company, Swan Telecom India, with a stake of 45 per cent worth $900 million, in September 2008. The joint venture was named DP Telecom in Mumbai. The Indian company accessed licensing services from 15 departments in 22 states to serve over 900 million people in India.

The UAE is expected to spend heavily on transport and logistics infrastructure in preparation for Expo 2020. This represents an opportunity for more Indian companies. The UAE is also quickly becoming a global transit point and gateway to India, Africa and Asia.

India is expected to become the UAE's biggest export destination by 2030, when, according to the forecast, it will account for an estimated 14 per cent of goods. Increased inward investments from the UAE could help India create the conditions for growth in the long term.

Over the next 20 years, South-South relationships based on increased economic and strategic co-operation are expected to become more important to the world economy. The relationship between India and the UAE could be a leading example.