The Hindu Business Line : UAE-India: Progressive partnership

From the firm mercantile foundations of the past when dates, pearls, clothes and spices were the main items of trade, commercial ties between India and the United Arab Emirates (UAE) have in recent years, acquired a new level of maturity. The relationship has benefited from the clear vision of the country’s founding father, the late Sheikh Zayed bin Sultan Al Nahyan, and its energetic realisation, as UAE celebrates its thirty-seventh year of independence. Sheikh Zayed’s vision was based on sound foundations. Income generated from oil, of which the UAE had huge reserves, was fundamental to jump start the country’s phenomenal growth. However, UAE’s founding father was aware that oil would not last for ever. Consequently, oil income had to be converted into assets that would power the federation’s non-oil economy. Apart from industry, the country’s geographical location was also wisely factored into a finely worked out strategy to generate rapid economic development. UAE’s rulers fully appreciated their country’s strategic location. It was realised the UAE stood at the cross roads of West-Asia, the Indian subcontinent, Africa, Europe and Central Asia. Consequently, if it developed its infrastructure of ports, airports and the services, such as banking and finance, the federation would emerge as one of the key trade and transportation hubs of the world. Once trade and investment would begin to flourish, development of tourism would be a natural by-product. Consequently, the construction sector, hotel industry, development of resorts and retail shopping became the focus of attention as UAE commenced its post-independence journey.

UAE is a country possessing the fifth largest reserves of oil in the world. Oil, however, has been spread unevenly among the UAE’s seven emirates—Abu Dhabi, Dubai, Sharjah, Ajman, Um Al Quwain, Ras Al Khaimah (RAK) and Fujeirah.

Expanding further, Dubai has been developing the gigantic Dubai World Central International airport. Once completed, this mammoth structure would be ten times larger that the existing Dubai International Airport and Dubai Cargo Village combined.

With development of tourism as part of its strategic plan, the UAE is building new hotels at a rapid pace. Between 2005-2008, the UAE planned to add 9,682 hotel rooms in Dubai alone. The Palm, Jumeirah will have 30 to 40 hotels once the project is completed. Several hotels and resorts are planned along the Jumeirah coast, and the coastline north of the Dubai Creek. The Dubai Department of Tourism and Commerce Marketing (DTCM) is guiding the overall development of tourism in the Emirate, supervising the licensing of hotels, hotel apartments, tour operators and tour guides. It has 15 overseas offices, geared up to promote and market Dubai as an attractive tourism destination. In Abu Dhabi, the Mubadala Development Company is playing a leading role in preparing the Emirate for the future. Formed in 2002, it has the mandate to form new companies and develop partnerships with local, regional and international investors. The company has invested in several sectors including energy, utilities, real estate as well a basic industries and services. Mubadala has a 51 per cent stake in the high-profile Dolphin Energy Company.

Drawing inspiration from Abu Dhabi and Dubai, which are on a fast track, other emirates, especially RAK and Fujairah are also growing rapidly. The emirate of Sharjah is an important centre of manufacturing and trade in the UAE. However, it has enhanced its reputation for promoting heritage museums and educational activity. India has been a major partner of the UAE throughout this spectacular journey. With the demise of Sheikh Zayed in 2004, his son Sheikh Khalifa bin Zayed Al Nahyan became UAE’s President and the Ruler of Abu Dhabi. The frequency of the interaction, both at the politico-economic level, as well at the people to people level has not only remained unabated, but, has indeed surged significantly in recent years. The buoyant relationship is visible in the diversity and scale which the economic relationship between the two countries. Some of the details show-casing Indo-UAE economic ties are quite stunning. The UAE has emerged as the second largest market for Indian products globally. Indo-UAE trade, which was valued at US$ 180 million per annum in the 1970s, has now shot up to around $ 22 billion. Exports from Dubai to India, alone increased 113%, from US$ 1.5 billion in 2006 to US$ 3.2 billion in 2007. Of the total exports of US$ 3.2 billion from Dubai to India, US$ 2.7 billion comprised of precious & semi-precious stones and precious metals.

Re-exports from Dubai to India increased by 97% i.e. US$ 3 billion in 2006 to US$ 5.9 billion in 2007. The fact that re-exports from Dubai was almost double of its exports reflects the significance of Dubai as trans-shipment point for Indian trade. India has emerged as the largest re-export destination of Dubai in 2007, with Iran in second position. The percentage share of India in the re-exports from Dubai went up from 13.9% in 2006 to 21.6% in 2007. Over a period of five years, re-exports from Dubai to India increased from US$ 0.8 billion to US$ 5.9 billion--an increase of 638%. India also provided the largest number of investors to the UAE in the first half of 2006. Statistics provided by the Department of Economic Development of the Government of UAE have shown that 1,152 investors had arrived in the country from India. As of February 2008, the number of Indian companies registered with the Dubai Chambers of Commerce, is 12,359 out of about 101,000 companies. Nearly 6,154 Indian companies out of a total of 33,103 are registered with Sharjah Chamber of Commerce. Indian companies in the Jebel Ali Free Zone Authority are 575. Nearly 681 have been registered with the RAK Free Trade Zone, along with 300 others that are registered with the RAK Investment Authority. Approximately 60% of the companies in the Fujairah Free Trade Zone are from India. Indian public sector undertakings (PSUs) are also making their mark in the UAE. Nearly 22 Indian PSUs have moved to the country. Indian manpower has played an indispensable role in UAE’s growth story. There are nearly five million Indians in the Gulf, with 65 per cent of them falling in the blue collar category. It is estimated that in 2007, nearly 42.5 per cent of UAE’s work force is Indian. According to Venu Rajamony, Consul General of India based in Dubai, UAE is the single most favoured destination of workers seeking employment in the Gulf.

As UAE and India look ahead and face up to new challenges, there are grounds for optimism that the growing partnership with India can be transformed into a strategic relationship, advancing a historical legacy to new heights.

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