Close interaction between the people of India and the Arabian peninsula goes back thousands of year. It’s only natural that these ancient links have transformed into modern, robust, wide-ranging socioeconomic ties between the UAE and India. The UAE, which has a large workforce of expatriate Indians, provides financial capital and technical know-how that can help India fulfil many of its growth requirements.
This relationship moved to a new level with this week’s visit to Abu Dhabi and Dubai by Indian prime minister Narendra Modi. As The National reported yesterday, Mr Modi presented the UAE government with proposals for $1 trillion (Dh3.67tn) in investment opportunities. Mr Modi, who is working to fulfil an electoral promise of completely reforming the Indian economy, left this country with an agreement to raise $75 billion through the UAE-India Infrastructure Investment Fund. The money will be spent on much-needed capital projects such as railways, airports, roads and industrial corridors. The two countries also pledged to boost trade by 60 per cent.
These figures are significant. It is no secret that India’s infrastructure development has lagged woefully. Foreign investors have approached the country with caution, citing complications with land acquisition and obtaining environmental clearances, and various procedural delays. In addition, India’s archaic labour laws strictly regulate the hiring and firing of employees and require a massive amount of paperwork, which often deters companies from employing new staff. In recent years, multinational retailers such as Walmart have shelved their expansion plans partly due to the requirement that they source 30 per cent of their wares from small Indian suppliers. Many projects across different sectors have not proceeded because foreign investors are not willing to take the risk and deal with this type of protectionism.
Foreign investment will not be attracted to India and have an impact unless the country can provide a globally competitive business environment. Mr Modi has raised great expectations here, and among his own people. All will be hoping that the agreements made this week will lead India to a new era of prosperity. But for these deals to be realised bureaucratic red tape and corruption must be removed once and for all.
