India-UAE trade can be a cornerstone of the global economy
The year 2021 represents a landmark for both India and the United Arab Emirates (UAE). On December 2, the UAE will celebrate the 50th anniversary of our nation’s founding, when the collective aspirations of our leaders to establish a modern, outward-looking State first took root. In August, India marked its 75th Independence Day, a chance to reflect on its own remarkable journey since emerging from two centuries of colonial rule.
The relationship between the two nations runs much deeper, of course — our economic, social and cultural links have been forged over more than five decades of trust, collaboration and shared interest. India is one of the UAE’s oldest and most important friends and our delegation’s visit to New Delhi is the beginning of a process that will, we very much hope, conclude in a broad, multi-faceted trade and investment agreement that will strengthen those ties further.
These talks come at a pivotal moment for the world’s economy. The impact of the global pandemic is still being felt in trade volumes, supply chains and key sectors such as travel, tourism, aviation and hospitality, while the technological shifts of the Fourth Industrial Revolution are constantly requiring new ways of thinking to unlock their potential and equally distribute their benefits.
The UAE government believes the only way forward is to reach out to like-minded, forward-looking countries around the world to cement deeper, more integrated relationships that accelerate opportunity, support economic growth, foster innovation and share knowledge. With our future as intertwined as our history, we naturally consider India a vital partner in these efforts.
It’s perhaps difficult to overstate just how important India has been to the UAE since the nation’s founding – and indeed on the region before it. Indian traders, merchants and seaman long ensured the port cities of Abu Dhabi, Sharjah and Dubai brimmed with life, while the Rupee was the currency exchanged in our markets and shops until the launch of the Emirati dirham in 1973. Today, there are in excess of 3.5 million Indian nationals who call the UAE home, and the 4,365 companies they have formed cover a diverse number of sectors, from real estate to retail, manufacturing to media, and include some our nation’s most remarkable entrepreneurial success stories.
Such commercial and cultural ties mean that the trade between the two nations has always been robust, and it is encouraging that it has rebounded so strongly following the challenges of Covid. During the first half of 2021, for instance, bilateral trade reached $21 billion, essentially a return to pre-pandemic levels, and India now ranks as the UAE’s second-largest trading partner, accounting for 9% of the UAE’s total foreign trade and 13% of our non-oil exports.
Foreign direct investment (FDI) is another dimension to our relationship. The UAE is the ninth largest investor in India, with over $18 billion invested in sectors such as services, sea transport, power, infrastructure and real estate. Indian investment in the UAE, meanwhile, stood at $8 billion in 2019, representing 6% of the total FDI into the UAE. These numbers include some highly significant deals signed in the last three years that underline the scope of UAE-India relations. In June 2020, Mubadala invested $1.2bn in Indian telecom provider and digital services firm Jio Platforms, while in 2019, a number of UAE entities, including Dubai’s Emaar, have committed to invest some $7 billion in food production and agriculture to create a UAE-India food corridor. Capital inflows from India included Reliance’s plans, announced in June this year, to invest $2 billion in Abu Dhabi’s TA’ZIZ Industrial Chemical Zone, while a consortium led by India’s state-owned Oil and Natural Gas Corporation (ONGC) have a 10% stake in the Lower Zakum Concession.
This week’s meetings will seek not only to build on these foundations but to continue recent efforts to cultivate closer economic ties. In 2017, His Highness Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of the Emirate of Abu Dhabi, visited India on two separate occasions, culminating in our relationship being formally upgraded to a “Comprehensive Strategic Partnership”. In 2019, the UAE was honored to welcome India’s Prime Minister Narendra Modi to our capital to receive the Order of Zayed, our nation’s highest civilian award, and to discuss further economic cooperation.
Over the course of these talks, it has become clear that India and the UAE share many priorities. We both want to enhance the business environment in our countries, attract FDI, and use trade as a means to secure stability and prosperity not just for our citizens and residents but for our respective regions.
The mutual benefits of such a deal are self-evident. India has the fifth largest GDP in the world at $2.87 trillion, along with five cities considered to be the fastest-growing economies in the world, according to the World Economic Forum. Areas such as industrial capacity, infrastructure, energy and agriculture provide opportunities for investment and growth. For India, the UAE represents an important market for manufacturing goods, digital technologies, industrial machinery, domestic appliances and precious metals and gemstones – and a vital gateway to rapidly growing economies. Such an agreement will, we believe, see bilateral trade exceed $100 billion.
We are confident, then, that we can both agree that our interests are best served by a comprehensive economic agreement that doesn’t just benefit the UAE and India but creates a newly energised trade route with global network effects. By creating a platform for a modern and dynamic economic partnership that creates new opportunities and improves standards of living, we can look forward to another 50 years of collaboration, cooperation and cultural exchange that shapes positive economic outcomes on an unprecedented scale.
Thani Ahmed Al Zeyoudi is the minister of state for foreign trade for the United Arab Emirates
The views expressed are personal