On February 14, 2024, the Indian Prime Minister (PM), Narendra Modi took the chair of Guest of Honour at the World Governments Summit 2024, held in Dubai, the United Arab Emirates (UAE). This was Modi’s seventh visit to the UAE. During the visit, Modi also inaugurated Abu Dhabi’s first Hindu stone temple. Speaking at an Indian diaspora event during the visit, Modi claimed, “India-UAE ties serve as a model for the world.”
Modi’s statement reaffirms the longstanding and progressive relationship between New Delhi and Abu Dhabi. The strengthening relationship between the two nations is manifested in expanding investment & trade, business partnerships, and people-to-people ties. Over the years, top leaders of both sides have paid frequent visits and decided to work together toward improving people’s mobility, innovation, and ease of doing business.
As the India-UAE relationship has transformed significantly, both sides are working toward expanding their bilateral trade and investment. The changing business landscape between the two nations has opened up various hidden doors for further business collaborations and partnerships. This development presents lucrative business opportunities for UAE companies to expand their operations into the Indian market.
This blog explores the historical context of India-UAE relations, examines the bilateral trade dynamics, identifies key areas for business collaboration, and assesses the availability of skills and resources that can benefit UAE companies seeking to venture into India.
A Brief History of India-UAE Relations
The relationship between India and UAE can be traced back centuries when both countries constantly interacted through trade and cultural exchanges. Connected by the Arabian Sea, both nations were able to forge longstanding trading routes and business relationships for many centuries. It was in 1972 that New Delhi and Abu Dhabi established their diplomatic relations to strengthen the bilateral relationship.
A new chapter in India-UAE relations began when Modi first visited the UAE in August 2015 to discuss a new strategic partnership between the two countries. Also, the Crown Prince of Abu Dhabi and Deputy Supreme Commander of UAE Armed Forces, H. H. Sheikh Mohamed bin Zayed Al Nahyan visited India to discuss their bilateral relationship further. As a result, both countries upgraded their relationship to a ‘Comprehensive Strategic Partnership’ in January 2017. In the following years, there were multiple bilateral talks and visits among the top leaders of both nations to expand cooperation between New Delhi and Abu Dhabi.
Both countries held a wide range of talks on bilateral, regional, and multilateral issues of their common interest. As a result, India and the UAE signed the Comprehensive Economic Partnership Agreement (CEPA) on May 1, 2022, aiming to expand their trade relationships.
Today, the rising growth in bilateral trade plays a crucial role in propelling the economies of both countries. Over the years, the bilateral relationship has expanded remarkably in trade & investment, security cooperation, cultural & people exchange, and more.
Trade & Investment Dynamics of India and the UAE
Since CEPA came into force, the bilateral trade and investment relations between India and the UAE have improved substantially. Abu Dhabi emerged as a leading investor in India’s infrastructure sector and invested USD 75 billion in India in 2022-2023. With this, the UAE was India’s fourth largest foreign direct investment (FDI) investor.
For the same year, the India-UAE bilateral trade reached USD 85 billion. Both countries welcomed the rising growth in India-UAE trade and the progressive economic partnership. With this relation in progress, Abu Dhabi is New Delhi’s third-largest trading partner and second-largest export destination. Similarly, India is also the UAE’s second-largest trading partner. Both countries are looking for a USD 100 billion target of non-oil trade by 2030.
Both sides signed several Memorandum of Understanding (MoU) to boost their bilateral merchandise trade and investment. Some of the key investment areas include innovative healthcare projects, renewable energy, food park development, etc. Over the years, both governments decided to work together on Special Economic Zones (SEZs) to boost manufacturing units. The recent events and developments that can boost the India-UAE bilateral trade in the coming years:
- On November 02, 2023, the UAE promised to invest USD 50 billion in India to boost trading.
- On January 10, 2024, a Dubai-based multinational logistic company, DP World signed an MoU with the Government of Gujarat for SEZ to develop ports and infrastructure.
- On February 07, 2024, the UAE’s largest sovereign wealth fund, Abu Dhabi Investment Authority (ADIA) reported to set up a USD 4-5 billion fund to invest in Gujarat’s GIFT City.
Seeing the fast economic growth of New Delhi, some of the leading sovereign wealth funds such as Royal Group, Mubadala Investment Co., and ADQ are eyeing to invest in India.
Key Business Opportunities for Dubai Companies in India
Today, Dubai companies have the advantages of preferential trading and tariff reduction with India. With 80% of trade tariffs reduction from UAE to India, CEPA allows easy access for Dubai companies to the Indian market and opens up several business opportunities in India.
In the latest development for closer ties between New Delhi and Abu Dhabi, the Indian government is offering a 10-year tax holiday for overseas companies setting up production units in special SEZs with no taxes on overseas fund transfers to the Indian market. The following are some sectors presenting vast business opportunities for Dubai companies in India:
Infrastructure Development
India is on the verge of building world-class infrastructure across major cities. The Indian government has ambitious infrastructure projects, which can attract UAE firms specialized in construction, transportation, logistics, and urban development.
Renewable Energy
Both nations are committed to sustainable energy and have decided to join hands in effective transitions to renewable energy sources. This is a key opportunity for UAE companies to contribute their expertise in renewable energy and leverage their technologies to India’s clean energy objectives.
Information Technology
India is a major hub for information technology (IT) investment and various IT-related innovations. Similarly, the UAE is becoming a global technology hub. Emerging opportunities for business collaboration in the Indian IT sector, like cybersecurity, cloud computing, and Artificial Intelligence/Machine Learning (AI/ML) present crucial opportunities for UAE businesses.
Healthcare & Pharmaceutical
India is among the globally attractive healthcare and pharmaceutical services centers. The country attracts a chunk of investment for clinical-based research and development (R&D), medical tourism, and drug discovery. This growing demand for quality healthcare services presents opportunities for UAE companies in medical equipment, healthcare infrastructure, and telemedicine solutions.
Tourism and Hospitality
India’s rich cultural heritage and booming hospitality sector attract millions of tourists across the globe. The UAE is already the center of global tourism. New Delhi’s plan to boost the tourism and hospitality industry can be a vital investment opportunity for UAE companies specializing in hospitality projects and tourism infrastructure.
Today, several UAE companies have bases in India. Some major UAE companies in India include DP World, Etihad Airways, Sharaf Group, FAB Bank, Lulu Group, Emaar Properties, and Emirates NBD. These companies have already established a significant market share in Indian sectors such as finance & banking, retail, real estate, logistics & transportation, and more.
Indian Skills and Resources Available for Dubai Businesses
India has a vast pool of skilled professionals across various sectors, such as IT, finance & banking, engineering & designing, healthcare, hospitality, etc. Annually, the country produces thousands of skillful resources from premier institutes such as IIMs, IITs, and other technical-based institutions. This abundant availability of talent makes India an attractive destination for hiring remote professionals for various overseas assignments. With this advantage, UAE companies can access a pool of Indian talented workforce and smoothly operate remote teams. India’s large English-speaking population is a key attraction for UAE companies to look for Indian talent. Additionally, the cost of hiring Indian talents can be comparatively less expensive as compared to keeping an internal team in the UAE.
India has become an attractive destination for hiring remote talents specialized in software development, engineering & designing services, digital marketing and data analytics, innovation & research, business process outsourcing, and more. UAE businesses can easily tap into a diverse Indian talent pool and leverage their services in the Indian market. Moreover, the rising people-to-people connection between the two countries can further boost the business opportunities for UAE companies in India.
Conclusion
The India-UAE relationship is becoming stronger today due to the existing massive trade and investment opportunities for the business communities of both countries. Bilateral agreements such as CEPA and signing several MoUs between the two countries present a key opportunity for strategic investments, economic growth, job creation, and innovation in both countries.
Conferring Modi with the UAE’s highest civilian award, the prestigious Order of Zayed in August 2019 was one of the examples of closer ties between the two countries. Also, India and the UAE tied a strong political connection when the latter country became a member of the BRICS in January 2024.
In February 2024, Indian PM Modi and UAE President Mohamed Bin Zayed Al Nahyan joined hands and launched the UPI RuPay card in Abu Dhabi to ease digital payment systems between the two countries. As New Delhi and Abu Dhabi deepen their economic ties and business collaborations, it’s a good time for UAE companies to take advantage of lucrative business opportunities in India.
