Since its creation in 1971, the United Arab Emirates (UAE) has been one of India’s largest trading partners in the Arabian Peninsula. And, trade between the two countries has only been getting better with the advent of years.
In March 2015, UAE-based companies got together to form their first industry association in India. Provisionally called the Business Council, the industry body is the brainchild of 15 UAE-based large companies, with growing investments in India. The council, which held its second meeting in Mumbai, aims to begin its membership drive in the next few months.
Significantly, the combined investments of the companies crossed the $8 billion mark last year. Also, several other large investments are currently at various stages of regulatory approval. Bilateral trade between the two countries has crossed $60 billion and is expected to double in the next five years, as the UAE remains the preferred gateway to the GCC market for Indian companies.
“The need for an industry body for UAE companies was being felt for a long time,” explains Saed Mohamed Almheiri, charge d’affaires, Embassy of UAE in India. “While we feel that large companies can still manage, it’s the smaller companies which sometimes have difficulties in finding their way around in India, given the complex regulatory environment.” While the proposed council’s charter is currently at the drafting stage, given the direct involvement of the government of the UAE in it, the council could possibly act as a nodal agency for UAE-based companies, to interact with their government on issues related to business operations in India.
Almheiri, who has played a key role in getting members onboard for the council, explains the future investment plans of his government in India. “Our investments in India will triple in the next few years. And, we
count India as one of the most prominent markets for UAE investments. Given our government’s continued emphasis on diversifying from oil revenues, the council is expected to play an active role in sourcing investment opportunities in India.”
Over the last few years, several UAE companies have made high profile investments into India. In 2013, Abu Dhabi-based Etihad Airways bought a strategic 24 per cent stake in India’s cash-strapped Jet Airways. The deal, which finally went through, attracted controversy over allegations that Jet- Etihad was allowed increased seat share in flights to India.
Similarly, Emaar MGF, one of the biggest real estate players from the UAE, continues to face regulatory issues in India. The company has invested more than $2 billion in India but is currently facing a penalty notice of 18,600 crore (about $1.4 billion) from the Enforcement Directorate over its land purchase practices in India.
Similarly, the UAE’s airline companies, such as Etihad, Emirates and Fly- Dubai, have long sought additional flying rights from the government of India. FlyDubai, the smallest of the three, has been seeking additional
traffic rights to the Tier II and III airports operated by the Airports Authority of India. “Yes, in such large investments there are bound to be roadblocks sometimes and that’s why it’s important that the interests of all UAE companies are served by a single body, which can take up their cause at the appropriate level,” adds Almheiri.
Bilateral trade between India and the UAE roughly accounts for 20 per cent of UAE’s foreign trade. Indian exports to the UAE include gems & jewellery, vegetables, fruit, spices, engineering goods, tea, meat and its preparations, rice, textiles and apparel and chemicals.
Significant growth Investment from the UAE in India has also witnessed a significant growth in recent years. The emirate has invested over $8 billion in India through FDI and Fll routes. Major UAE companies invested in India include DP world, Emaar group, A1 Nakheel, ETA Star group, ss Lootah group, Emirates Techno Casting, RAK Investment Authority, Damas Jewellery and Abu Dhabi Commercial Bank.
“It is wrong to assume that the council is meant only for the UAE companies in India,” maintains Nir- vikar Jain, chief representative, FGB, India representative’s office. India is currently the third largest investor in the UAE. Indian companies like L&T, Punj Lloyd, Hinduja group, Pioneer Cement and Oberoi group of hotels, have bagged projects in the country and, following the emergence of the UAE as a major re-export centre, Indian companies have emerged as important investors in the free trade zones such as Jebel Ali, Sharjah Airport, Hamariya Free Zones and Abu Dhabi Industrial City.
Once functional, the council will also be a point of contact for Indian companies doing business in the UAE. Jain, who along with Almheri, has been on the forefront of the efforts to get companies come together, adds that the initial blueprint of the council will be drafted with inputs from its existing members, which include funding options and by-laws.
♦ DEBORSHI CHAKI email@example.com