Mohamed begins state visit to India from Wednesday
His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, will begin on Wednesday a three-day official visit to India, where he will meet Indian Prime Minister Narendra Modi, in the Indian capital, New Delhi.
While visiting India, Sheikh Mohamed will discuss with senior Indian official ways to strengthen cooperation and friendship between the two countries in the light of continuous coordination and consultations regarding regional and international issues of mutual concern.
The Crown Prince of Abu Dhabi will be accompanied by a high-profile delegation including a number of sheikhs, ministers, senior officials, businesspeople and economists.
MOE Releases Crucial Report on UAE-India Economic Relations
The Department of Analysis, Commercial and Industrial Information at the Ministry of Economy (MOE) has released an analytical study on the reality of the Indian economy and the non-oil foreign trade between the UAE and India.
Along with featuring India’s salient economic indicators, the study contains economic, statistical and descriptive data on the movement of foreign trade and investment in the Republic of India.
The study concludes that trade and investment sectors form the cornerstone of the booming bilateral economic ties between the UAE and India. As far as the direct foreign non-oil trade between the two countries is concerned, the study reveals a 21% decline in the total value of bilateral trade exchange during 2014 as compared to 2013.
This, as the study points out, came as a result of the decline of the UAE’s re-export value by 33% to US$5.8 billion in 2014 from $8.6 billion in 2013. National exports fell during the same period by 31%, while the country's imports from India declined by 12%. The decline affected the balance of trade leading to a rise of deficit from US$3.45 billion in 2013 to US$6.29 billion in 2014.
On the UAE’s free zone trade (FTZ) with India, the study indicated that it saw a 16% decline during 2014 as against 2013, which came as a result of the fall of the UAE’s free zones exports by 59% from US$738 million in 2013 to US$304 million in 2014. The UAE free zones re-exports fell during the same period by 28% while free zones’ imports to the UAE from India dropped by 3.5%. This adversely affected the balance of trade leading to a rise in deficit from US$ 1.9 billion in 2013 to US$ 2.8 billion in 2014.
UAE's non-oil exports to India in 2014 stood at nearly US$ 5.3 billion, with a decline of 31% compared to 2013. Overall, 10 commodities accounted for 88.5% of the total non-oil exports of the UAE to India. Different varieties of gold - raw, dust, and the semi processed - occupied 59% of the total non-oil exports to India which stood at US$3.16 billion, down by 46.6% compared to 2013. This was followed by ornaments and jewelry standing at US$364 million with an annual growth of 41%, and by trade in copper wire with a total value of US$319 million and an annual growth rate of 26%.
Key Trade Partner
In terms of the UAE’s imports, India is the third largest trade partner of the nation with imports from India touching nearly US$17.4 billion in 2014 with a decline of 12.4% from 2013. Ten commodities accounted for 67% of imports from India during 2014. Various gold varieties dominated the list of the UAE’s imports from India with a total value of US$ 4.6 billion accounting for 26.4% of the total UAE imports from India, with an annual decline of 1.5%.
Diamond came in second with a total value of nearly US$ 3.2 billion, accounting for a 47% downfall compared to 2013. Jewelry and ornaments occupied third spot with a total value of US$ 2.1 billion representing a growth of 30%. It is notable that the UAE’s imports of wheat rose by 179%.
The UAE's re-exports to India during 2014 fell by 32.8% compared to 2013, with a total value of US$ 5.8 billion in 2014 as against US$ 8.6 billion in 2013. This was due to a decline of the UAE’s re-export of diamonds by 32.3 %, as well as precious stones and semi-precious stones by 73.3%. Added to this was the decline of the UAE’s re-exports of silver in raw, dust, and semi-processed forms by 57%. Re-exports of phones to India fell by 82%. However, on the plus side, there was a rise of re-exports of hard drives and tapes by 6566%. Re-export of diamonds alone accounted for US$4.38 billion representing 76% of the total re-exports of the UAE to India.
The study revealed that the UAE is the largest Arab investor country in India accounting for 81.2% of the total Arab investments in India and is ranked 11th in the world in terms of foreign direct investments in India. The total UAE investments in India amounted to US$ 8 billion, including US$ 2.89 billion in the form of direct foreign investments. UAE investments in India are concentrated in five sectors namely construction (16%), energy (14%), metallurgy (10%), services sector (10%), computer software and hardware (5%). The other sectors include petroleum products, precious metals, gems and jewelry, minerals, chemicals, wood and wood products.
The study indicates that among the oldest national companies investing in India are DP World (which handles 34% of the total container terminals in India), Emaar MGF, which has emerged a leader in the Indian real estate sector, the Abu Dhabi Investment Authority (ADIA), Abu Dhabi National Oil Company (ADNOC), Emirates Telecommunications Corporation (Etisalat), Abu Dhabi National Energy Company (Taqa), National Petroleum Construction Company, Emaar, Abu Dhabi Polymers Company (Borouge), Abu Dhabi Investment House, Dubai Investments, Dana Gas, Dubai Aluminum Company Limited (DUBAL), Dubai Cables (Ducab), Abar Inc, Tecom Investments, Emirates Airlines, Etihad Airways, Flydubai, Air Arabia, Dubai Group, Sharaf Group, National Bank of Abu Dhabi, Emirates NBD, Abu Dhabi Commercial Bank, First Gulf Bank, Mashreq Bank, Rakeen, Ruwais Fertilizer, and RAK Ceramics.
The attractive investment environment in the UAE owing to several factors such as the economic and political stability and the geographic and strategic location as the gateway to the regional and international markets, has made it an ideal place for investments, as the study has indicated.
Backed by excellent geographical location, the highly developed infrastructure, and ease of investment, made the UAE the second largest country in terms of Indian investments in the Arab region with a total FDI flow of US$5.7 billion in 2013 and a growth rate of 20.30% compared to 2012.
The Republic of India is a country located in South Asia and is made up of 28 states and seven union territories with a parliamentary democratic system. It is the seventh largest economy in the world with a total GDP of (at current prices), according to World Bank statistics, approximately 2182.577 billion US$ during 2015, achieving a 6.4% growth in 2015 as against 2014.
India is one of the developing economies in Asia that maintained economic stability even during the global financial crisis. This was made largely possible because of the huge financial stimulus provided by the government, as well as low interest rates, rise in industrial production and decrease in reliance on imports.
The study further states that, as per the statistics released by the World Trade Organisation in its World Trade Report 2015, India was ranked 19th globally in terms of global exports with a total value of US$317 billion and a contribution of 1.7%, to world exports. India was ranked 12th globally in global imports with a total value of US$460 billion and a contribution of 2.4% to world imports.
India is the number one trade partner of the UAE with a relative share of 9.8% of the total UAE non-oil trade. It also ranked first in the UAE’s overall exports with a relative share of 14.9% and ranked second in the UAE's re-exports to the world accounting for 8.7% of the UAE's total re-exports. India also ranked third in the UAE’s total imports with a relative share of 9.2%.
Total FDI in India in 2014 was nearly US$34.4 billion with a growth of 22.1% against US$28.2 billion in 2013. In contrast, Indian overseas investments rose from US$1.68 billion in 2013 to nearly US$9.8 billion in 2014 at an annual growth rate of 487%, according to the "Global Investment 2015" report released by UNCTAD.
The study shows, based on UNCTAD’s World Investment Report data, that India has assumed a leading position in the world by virtue of its ability to attract foreign direct investment. It occupies 10th place in the world due to several factors: it is one of the largest economies in the world occupying a distinct strategic position. India is also a large consumer market with a high growth rate and has an abundance of trained skilled manpower available at a competitive price.
It has one of the largest manufacturing sectors in the world covering all industrial activities; it also has one of the largest pool of scientists, engineers and technicians in the world. India is blessed with rich agricultural and mineral resources, and possesses excellent infrastructure, which includes a sophisticated financial sector, and a flexible political and commercial environment wherein the investors are provided with all facilities and tax incentives including import-export facilities.
India offers a sophisticated legal environment, and ensures easy transfer of capital. India offers income tax exemptions on export earnings. Similarly, India offers a full exemption from customs duties on industrial inputs.
The study notably points out that India offers many attractive sectors for FDI including the financial and non-financial sectors, such as the services, telecommunications, transport, industry, fuel, chemicals, construction activities, drugs and pharmaceuticals, food processing, cement products, gypsum, and electrical equipment.
Important Trading Nation
On India’s foreign trade the study pointed out that India is one of the world’s most important and influential countries in terms of trade volume as it ranked 12th in imports and 19th in exports in 2014, according to the International Trade Centre statistics. India's exports during 2014-2015 touched nearly US$310.34 against US$314.41 billion in 2013-2014 marking a 1.29% fall.
During 2014-15, India’s exports were mainly concentrated in ten commodities which represented 43% of India’s overall exports of which petroleum oils and oils obtained from bituminous minerals topped the chart with a total value of US$55.93 billion and a relative share of 18% of its total exports. Diamond occupied second place with a total value of US$24.23 billion with a relative share of 7.8% of its total exports and a decline of 7.3% compared to the 2013-2014. Jewelry and precious metals came in third with a total value of US$13.2 billion and a relative share of 4.3% and a growth rate of 22%.
On the other hand, India's imports during 2014-2015 stood at US$448.03 with a marginal decrease by 0.48 per cent against US$450.2 during 2013-2014. Nearly 54% of India’s imports concentrated in ten commodities of which crude petroleum oils and oils extracted from bituminous minerals topped the list of India’s imports amounting to US$116.44 billion with a high relative share of 26% and a decline of 18.9% during 2013-2014. Gold - raw, dust and semi-processed - came in second place with a total value of US$34.4 billion and a relative share of 7.7% with a 20% growth in the import of the commodity compared to 2013-2014.
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