UAE-India relationship is set to enter a new era

Muzaffar Rizvi
Abu Dhabi: The Indian business community is specifically upbeat about Modi’s short trip and expects it would pave the way to further promote bilateral trade and investment relationships in the years to come.
Bilateral trade and socio-political relationships between the UAE and India will enter into a new era with the visit of Prime Minister Narendra Modi, the first Indian premier to visit the UAE in 34 years.
Modi will be spending a very busy time the moment he arrives in Abu Dhabi today and is expected to discuss energy, trade, investment and security partnerships between the two countries during his two-day visit.
He will also be visiting Dubai where a warm reception is being planned tomorrow.
Indian expatriates, who form the largest ethnic community in the UAE and constitute almost 30 per cent of the country’s population, are gearing up to make the historic visit of their premier a success.
The Indian business community is specifically upbeat about Modi’s short trip and expects it would pave the way to further promote bilateral trade and investment relationships in the years to come.
In fact, it will be a challenging task for Modi to revitalise bilateral trade, which fell from its peak level of $75.45 billion in financial year 2012-13 to $59.04 billion in 2014-15.
India is still the largest trading partner of the UAE despite the $16 billion drop in trade during the past two years, but it needs fresh impetus to sustain this status due to the increasing share of Chinese products and the possible re-entry of Iran in international business in the coming months.
Banking is another area where the two sides should focus to cater to the needs of the 2.6 million non-resident Indians, or NRIs, in the UAE. At present, Bank of Baroda is the only Indian lender providing full banking services to NRIs. Some other Indian banks have representative offices in the UAE, but they are only able to offer limited services to the largest expat community in the country.
The prime minister will also be keen to welcome foreign direct investment, or FDI, from UAE corporate circles in key Indian sectors like retail, aviation, real estate and manufacturing, where the process of reforms has already been initiated and these industries are now open to foreign firms.
In terms of FDI, the UAE is the 10th-biggest investor in India as it poured $3 billion into key strategic projects while approximately another $5 billion is involved in portfolio investment.
But these figures do not reflect the true investment potential of the UAE’s cash-rich sovereign wealth funds, private groups and corporate firms, which always look for opportunities that offer good returns on investment.
Modi can invite the Abu Dhabi Investment Authority and other industry leaders like DP World in shipping, etisalat in telecoms, Majid Al Futtaim in retail, Emirates and Etihad Airways in aviation, and Emaar and Damac in property to explore investment opportunities in India.
Some of the UAE groups like DP World and Emaar already have projects in India and they might go the extra mile after the Indian premier’s visit.
As the prospects of Indian economy are bright with over seven per cent gross domestic product growth this fiscal year, some of the Indian-led private sector groups would like to cash in on the opportunity to reach a market of more than 1.2 billion people.
Some leading Indian firms, which are running successful businesses in the region, are keen to replicate their success in India – provided a level playing field is given for investment in infrastructure, road transport projects, retail joint ventures, real estate and construction industries.
Perturbed by unrest in some parts of the Middle East, these private businesses can offer India much more than it expects to develop its retail, property and construction industries in line with Modi’s initiatives to attract foreign investment in these key segments of the economy.