Bilateral trade between the UAE and India is set to grow by about 6 per cent annually in the coming two years, as the two countries deepen ties and the pace of regulatory reform in India quickens.
"We have witnessed great growth [in UAE-India trade] over the last 10 years – if you add it up it reaches half a trillion dollars," said Juma Mohammed Al Kait, assistant undersecretary for foreign trade affairs at the UAE's Ministry of Economy. "During the upcoming year or two this number will increase and we will keep growing at the same momentum – around 6 per cent."
Bilateral trade for 2016 including oil reached US$50 billion, Mr Al Kait said. Trade between the two countries, excluding oil, stood at $36bn. India accounts for about 10 per cent of the UAE’s foreign trade. The country, which has been among the top three UAE trading partners in the past few years – is currently the largest partner.
________________________________
Read more:
[ Politicians battle over India demonetisation drive, one year on ]
[ Google enters India's mobile payments arena ]
_________________________________
“India is significant for us, and, what’s more, there is no trade imbalance,” he said. About 9 per cent of the UAE’s total exports go to India, while 8 per cent of the UAE’s imports come from India.
Gold makes up the bulk of bilateral trade, which accounts for just under half of all trade, Mr Al Kait said. The UAE has developed various platforms for the buying and selling of gold between the two countries. “We are trying to go beyond this, to go upstream and further develop the gold trade through many different kind of products,” he said.
There is “enormous potential” to deepen trade and investment links between the two countries that can help leverage “major economic shifts the two countries are undergoing,” said Mr Al Kait who was speaking at the UAE-India Economic Forum in Dubai on Wednesday.
Investment from India in the UAE outweighs UAE investment in the country. Indian investments in the UAE reached $6.4bn in 2015 compared with $5bn in UAE investment in India. Market reforms by the Indian prime minister Narendra Modi may entice more foreign investors and may lead to an increase in the UAE's investment in India, Mr Al Kait said. "We have a huge investment [in India] but we think this is not enough," he said. "There is room for doubling this number...A lot of tough economic reforms have been made to increase transparency and tackle other issues faced by emerging economies and this is encouraging for the business community here."
Last week, a consortium of UAE private investors called the NRI-Emirati Investors Group, said it would raise $1bn for a fund to finance infrastructure projects in India – said to be the biggest local private fundraising effort of its kind.
Earlier last month, Abu Dhabi Investment Authority (Adia), one of the world's biggest sovereign wealth funds, signed a $1bn agreement with India's National Investment and Infrastructure Fund to invest in energy, transport and other infrastructure projects across India.
There is appetite to resurrect talks for a GCC-India free trade agreement (FTA), Mr Al Kait said. These first began a decade ago but stalled against an uncertain investor climate in India before Modi came to power.
“We have had ongoing trade negotiations between the GCC and India,” Mr Al Kait said.
“We need to [recommence] the negotiations from some years back. I don’t have a clear timeframe as it sits within the GCC secretariat, but given how well we are doing without
[an FTA], if we can sign, it will take the relationship to a totally new level.”