Khaleej Times, Mon, Apr 29, 2024 | Shawwal 20, 1445
UAE-India trade on track to surpass $100b by 2023
Emirates:
The UAE and India are on track to surpass a target of $100 billion in bilateral
non-oil trade by 2030 in the wake of the landmark free trade agreement signed in
May 2022.
The two-way trade has increased 15 per cent since the signing of the
Comprehensive Economic Partnership Agreement, Ahmed Aljneibi, Cepa Council
Director, says. "The bilateral trade has increased almost 15 per cent since the
CEPA entered into force on 1 May 2022. Our two countries are on track to far
surpass the goal of achieving $100 billion in non-oil trade by 2030," he said at
a business roundtable meet in Jaipur.
The UAE is India's second-largest export destination after the US, third-largest
trading partner, and fourth-largest investor. India is UAE’s second largest
trading partner after China.
Cepa brings cuts in tariff, fast-tracked approvals for business and access to
trade zones. As a result, trade between India and the UAE touched historic highs
going from $72.9 billion in FY22 to $84.5 billion in FY23. About 90 per cent of
India’s exports to UAE now attract zero duty under the FTA with gems and
jewellery, pharmaceuticals, food, and energy sectors, the key beneficiaries.
Dr. Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade, has said
the value of the UAE's direct investments in India reached about $17 billion by
the end of September 2023, making it the seventh-largest investor in India
globally and the first Arab country with a 3.0 per cent share of total foreign
direct investment.
Indian investments in the UAE reached $8 billion, ranking second globally with a
6.0 per cent share of total foreign direct investment into the country. Thus,
the value of the UAE-India mutual investments is $25 billion, 70 per cent of
which is from the UAE to India, Al Zeyoudi said.
The UAE’s sovereign fund has been an active participant in the Indian stock
market; Abu Dhabi Investment Authority holds 22 listed stocks with a net worth
of over Rs34 billion, as per a December 2023 filing. This is across real estate,
infrastructure, logistics, food, and other sectors. Adia is setting up a $4-5
billion fund to invest in India through GIFT City, Gujarat.
Since Prime Minister Narendra Modi assumed office in 2014, India has transformed
its relationship with the UAE and other Gulf countries from one focused on
energy, trade and Indian expatriates into a new framework encompassing political
relations, investment, and defence and security cooperation. India’s priorities
include attracting investments to increase economic growth, addressing regional
security concerns, and enhancing its regional presence and influence.
In one of his last foreign visits before India’s general election in April–May
2024, Modi travelled to the UAE on his seventh visit since 2015and Qatar on
February 13–15, highlighting the importance of the UAE as the third largest
Asian economy’s key regional partner. The UAE is the only regional country that
India engages with bilaterally, trilaterally (along with France) and, since
2021, in I2U2 quadrilateral grouping with the United States and Israel.
A recent move by the central banks of the two countries permitting the use of
local currencies for cross-border transactions including trade, remittance, and
investment flows also is giving the trade momentum a new fillip. India’s payment
system, UPI, was linked with UAE’s instant payment system Aani in a move likely
to benefit over 3.5 million Indians living in the UAE, and travellers between
the two countries. India’s Rupay cards can also be used in the UAE.
The GCC is India’s largest regional-bloc trading partner. Trade with the GCC
comprised 15.8 per cent of India’s total trade in FY2022–23, compared to 11.6
per cent of total trade with the European Union.