UAE-India trade may hit $100b in 2020

Abu Dhabi - India ranks third among countries that export to the UAE, accounting for about 9.2 per cent of the total imports by the UAE.

India is considered to be the UAE's primary trade partner, accounting for about 9.8 per cent of its total non-oil trade. India is also the largest importer of goods from the UAE, buying about 14.9 per cent of that country's exports and about 8.7 per cent of its re-exports, becoming the UAE's second-largest market in the latter category.

India ranks third among countries that export to the UAE, accounting for about 9.2 per cent of the total imports by the UAE. The total volume of foreign trade between the two countries amounted to $60 billion in 2014, making the UAE India's primary trade partner in the Middle East and North Africa. Economic sources expect the value of trade exchanges between the UAE and India to hit $100 billion in 2020.

In a report on economic and trade relations between the UAE and India, the ministry of economy recommended the strengthening of bilateral relations, increasing the volume of joint investments and expansion of bilateral trade to make the UAE India's primary trade partner. The ministry said the trade and investment sectors constitute the cornerstones of prosperous bilateral economic ties between the UAE and India.

The ministry also said there are abundant and feasible opportunities for economic cooperation and the establishment of joint ventures between the UAE and India, and that every economic facility is a viable opportunity for establishing partnerships as they all have necessary factors, such as expertise, modern technology, funds and energy.

This encourages both countries to discuss possible partnerships and form specialised committees that can supervise the implementation in a way that serves the interests of both parties.

In its report, the ministry of economy also said the Framework Agreement on Economic Cooperation between India and the GCC that took place in August 2005, aimed at exploring the possibilities of establishing a free trade area between the two parties, was a quantum leap in trade exchanges between the two parties. GCC countries are India's important trade partners and account for more than 11 per cent of India's global exports, a figure that continues to grow. This agreement may also be the key to more comprehensive cooperation between the two parties in various fields.

The report said that India is the seventh largest economy in the world with a total GDP (at current prices) worth about $2,182.577 billion in 2015, according to World Bank statistics, achieving growth of up to 6.4 per cent from 2014.

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The report also said India is one of the developing Asian economies that has maintained its economic position despite the global financial crisis, as a result of the large fiscal stimulus offered by its policies and its pursuit of a policy to reduce interest rates on monetary policy tools, as well as the rise in its industrial production and its decreasing reliance on exports.

Statistics issued by the World Trade Organisation in its 2015 World Trade report indicated that India ranked 19th in the world in terms of exports, worth $317 billion, and accounting for 1.7 per cent of the global exports. It also ranked 12th in the world with imports worth $460 billion, accounting for 2.4 per cent of the world's imports.

Based on data in the World Investment Report issued by UNCTAD, the ministry's report said that India ranked 10th in the world in terms of attracting foreign direct investment, placing it among the top nations of the world in this category. This is due to several reasons, such as the fact that India is one of the largest economies in the world, its strategic position, its rapidly growing consumer market, and its large skilled and trained labour force that is cost competitive, as well as its industrial sector that is one of the largest in the world, large manpower of scientists, engineers and technicians, besides rich agricultural and mineral resources.

The report also said India had excellent infrastructure, an advanced financial sector, an investor-friendly political and commercial environment offering amenities and tax incentives and facilitating import and export, and an advanced legal environment that allows ease of capital transfer and usage of brand names, in addition to exemption from income tax on profits made from exports, as well as full exemption from customs duties on industrial imports.

The report highlighted the many diverse sectors that attract foreign direct investment in India, such as financial and non-financial services, wired and wireless communication, transportation and the industrial sector, oil, chemicals, construction services and the pharmaceuticals sector, as well as food processing services, cement products and electrical equipment.

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The report also focused on the availability of large areas of arable land in India, as it is the seventh largest country in the world in terms of area. India is considered to be one of the largest food producers, among the largest sugarcane and tea producers and the second-largest producer of rice, fruits and vegetables.

India is also one of the world's leading countries in the production and consumption of food products due to its population, which is the second largest in the world, thus providing tremendous opportunities for investment in the food processing sector. The pharmaceuticals sector also occupies a central role in the Indian economy.

The report also indicated that the Indian automobile industry has begun to sweep the world markets, where India has become the second-largest manufacturer of tyres, the fifth-largest manufacturer of commercial vehicles and the fourth-largest passenger car market in Asia. It is also the largest producer of tractors in the world.

Tourist services are among the largest service industries in terms of total revenue and foreign exchange earnings. The wired and wireless telecommunication sector in India is the third-largest in the world and the second-largest among the emerging economies in Asia. It continues to grow at an unprecedented pace, and is considered one of the main sectors responsible for economic growth in India.

The value of India's exports amounted to nearly $310.34 billion in the 2014-2015 period, compared with $314.41 billion in the 2013-2014 period, registering a 1.29 per cent drop in value. Forty-three per cent of its exports were concentrated in 10 commodities in the 2014-2015 period.

India's most exported commodity was petroleum oil and oil extracted from bituminous minerals, worth a total of $55.93 billion, accounting for about 18 per cent of its total exports and registering a 10.7 per cent drop from the previous year. Diamonds came in second place, worth $24.23 billion in exports, accounting for about 7.8 per cent of the country's total exports and registering a 7.3 per cent drop from the 2013-2014 period. Jewellery and precious metals were in third place, worth $13.2 billion in exports, accounting for about 4.3 per cent of its total exports and registering a 22 per cent increase from the previous year.

In 2013, the UAE, represented by the Ministry of Finance, also signed an investment protection and promotion agreement with India, in addition to a convention on economic cooperation among the GCC countries in 2005, where nine meetings were held, most recently in June 2007 in New Delhi. A convention on the avoidance of double taxation between the two countries was also signed in 1992.