Ties between the UAE and India, founded on trade, go back decades. The UAE has welcomed generations of Indian families who have contributed to social and economic progress. India has supported the UAE’s transition from a pearl diving and fishing economy to one powered by oil. Today, we see a deep-rooted relationship, strengthened by Indian investment in the transition of the Emirates to a digital era.
This unparalleled relationship between the countries has only been strengthened in recent years, with the closer engagement to enhance business ties. The UAE has made significant investments in India, to support development in the country's physical but also digital infrastructure, that will lead to a next-generation economy.
India is home to 1.3 billion people. And as the country keeps moving into the digital era, its attractiveness as a destination for UAE foreign direct investment will continue to increase.
Trade between India and the UAE is valued at $59 billion, making the UAE India's third largest trading partner in 2019 – after China and US. And the UAE is India's second largest export partner, after the US.
The India-UAE High Level Joint Task Force on Investments continues to progress with both sides mutually agreeing on steps that remove trade barriers. In August 2020, India invited further investments from the UAE in sectors of the Indian economy such as infrastructure, logistics, food parks, highways, ports, airports, renewable energy and defence.
I met India's Prime Minister Narendra Modi late last year. From my meeting, it was clear that efforts to build UAE investor confidence come from the top. This is reassuring for any business person making initial forays into a new market.
Here in the UAE, we can adopt lessons from our own development story. It started 49 years ago with the realisation that infrastructure investment is a critical part of a nation’s growth strategy. If it weren’t for the UAE's world-class roads, utility services, ports, renewable energy and even digital infrastructure investments, we would not have progressed at this pace.
Given the UAE's philosophy of long-term investments, its confidence in the India story is not deterred by periods of uncertainty. Mubadala invested over $2bn during the peak of the Covid-19 pandemic. As Indians build new innovative companies, they will be backed by capital from the UAE across sectors such as digital connectivity, district cooling and renewable energy.
Investments alone, however, will not drive the country's growth – without policy arms working in tandem. Like growth capital, policies and regulations must also be written for the long term. This is an opportunity for India to resolve challenges around licensing, dispute resolution, land acquisition, taxation and retrospective laws. This is particularly important in sectors like renewable energy and utilities, where there is a significant upfront investment. For a foreign investor, such forward-looking policy developments are measures that build confidence.
With investors assured of returns in the form of safe policy frameworks and new reforms, FDI inflow to India will increase. India's recent tax exemptions for federal and local UAE sovereign institutions that are investing in India's infrastructure sector is a positive step, one that will harness the expertise of UAE businesses and build momentum for investing in India.
With India building cities, investors from the UAE will provide capital and forge a system of knowledge sharing. These systems will come in handy while planning approaches to the use of urban energy that are climate resilient and cost-effective. Doing so will help advance the entire nation in an inclusive manner.
India’s young population is optimistic, aspirational and willing to work hard to realise the potential of their country. And the country's government has an ambitious vision for its people. Given India's commitment to rebuild confidence, investment in the country's infrastructure – both digital and physical – will go a long way to transform its economic trajectory.
Khaled Al Qubaisi is chief executive, real estate and infrastructure investments and investment committee member, Mubadala Investment Company