Wed, Oct 30, 2024 | Rabi al-Thani 27, 1446 | DXB ktweather icon0°C

Forging Stronger Ties

UAE and India’s expansive economic diplomacy is rooted in synergy and symbiosis

Published: Tue 15 Aug 2023, 11:13 AM

Updated: Tue 15 Aug 2023, 11:15 AM

  • By
  • James Mathew

Top Stories

James Mathew, CEO and Managing Partner, UHY James

James Mathew, CEO and Managing Partner, UHY James

Long before the UAE dirham took centre stage in the UAE economy, did you know, Indian currency was the order of the day in the Trucial States (pre-independent UAE)? Till 1957, India and the Trucial States used the same currency notes however 1957 onwards ‘External Rupees’ or ‘Gulf Rupees’ were printed in India for circulation in the Gulf. This move was a step taken in the right direction to eliminate illegal activities like smuggling. The Gulf rupees dominated the UAE business landscape from 1957 to 1966 laying the foundation of a robust economic relation that thrived on synergy and symbiosis.

NEW DEVELOPMENTS DRIVING TRADE DYNAMICS BETWEEN INDIA AND THE UAE


In July 2023, the UAE and India announced the signing of two agreements that will ensure trade deals are settled in rupees instead of dollars and enable easier cross border transfers. The signing of both MoUs demonstrates the camaraderie embraced by both nations in the realm of economic diplomacy and reflects India's efforts to cut transaction costs by eliminating dollar conversions.

To put things into perspective, it is necessary to highlight the trade volumes recorded between India and the UAE. Bilateral trade between the two countries was $84.5 billion in the year from April 2022 to March 2023. Between April to November 2022, India's exports to the UAE saw a remarkable growth of 19.32 per cent, reaching $20.8 billion from $17.45 billion, an increase of $3.35 billion in value terms. The UAE was India’s third largest trading partner and second-largest export destination in FY2022-23. Conversely, India was the UAE’s second largest trading partner.

Furthering the vision of easier cross border transfers, the central banks of India and the UAE agreed to link India's Unified Payments Interface (UPI) and UAE's Instant Payment Platform (IPP) in addition to linking card switches — RuPay switch and UAESWITCH. Both these measures will increase the security and effectiveness of cross border transfers and encourage mutual acceptance and processing of card transactions.

The implementation of a local currency settlement system will fuel trade relations between UAE and India while bolstering the INR-AED foreign exchange market which will reap immense benefits in the long haul.

THE INDIA CHAPTER: AN ESSENTIAL COG IN THE WHEEL OF THE UAE’S GROWTH STORY

In the post pandemic landscape, the UAE has uninhibitedly achieved unprecedented growth by expanding trade, driving investment inflow, and introducing robust reforms. India and its 3.5 million strong expat community in the UAE has continually contributed in accelerating the UAE growth story. fDi Markets reported a remarkable rise of 80.3 per cent in total Foreign Direct Investment (FDI) capital, reinforcing Dubai’s economic potential. Dubai’s Department of Economy and Tourism stated India accounted for 12 per cent of the total projects announced and four per cent of the FDI received by Dubai in 2022.

The UAE’s reliable economic ecosystem combined with its strategic location promises Indian MSMEs and startups a gateway to an estimated one billion customers in the Middle East and Africa markets. Indian expats in the UAE are known to have a cumulative investment of more than $ 65 billion in the UAE economy of which almost $ 10 billion is estimated to be directed towards the real estate sector.

The launch of Golden Visa in the UAE has catapulted the demand for real estate properties among Indian investors by leaps and bounds. With the investment size for procuring Golden Visa marked at two million — real estate investments are a compelling proposition. High Net Worth Indians and many aspiring entrepreneurs are heading to the UAE to leverage the benefits that accompany the Golden Visa.

As a multipolar world order gains prominence, the UAE and India are securing a safe spot in terms of economic and political supremacy. On India’s 77th Independence Day, I take immense pride in playing my part as an Indian entrepreneur in the UAE’s spectacular growth story.

— James Mathew is the CEO and Managing Partner at UHY James.



Next Story