The UAE has initiated the process of channelising its long-promised $2-billion investments into food parks in India, starting with Gujarat, after the two countries sorted out concerns on curbs imposed by the Essential Commodities Act, sources have said.

The investments are being made as part of the four nation I2U2 (India-Israel-UAE-USA) initiative to develop a series of integrated food parks across India to enhance food security in the Middle East and South Asia.

“India has agreed to waive ECA curbs for a specified volume of commodities (coming under the ambit of the Act) that would be proposed to be processed and exported from the parks by the investors. The UAE will specify the quantities at a later stage of development,” a source tracking the matter told businessline.

Park in Kandla

The first food park is likely to be set up on land near Kandla where the investors would get into contract farming arrangements with locals. “The UAE is in talks with the State government for various permissions and work is expected to start soon. The investments will be made in tranches,” the source added. 

The UAE had first promised in 2018 to invest in food parks in India which later got dovetailed into the I2U2 initiative announced at the Leaders’ Summit in July 2022. It was virtually attended by Prime Minister Narendra Modi, US President Joe Biden, Israeli Prime Minister (former) Yair Lapid and UAE President Sheikh Mohamed bin Zayed Al Nahyan.

These food parks would incorporate state-of-the-art climate-smart technologies to reduce food waste and spoilage, conserve fresh water, and employ renewable energy sources, per the joint statement signed by the leaders at the Summit.

Shortlisted crops

The UAE has been worried about the ECA as three of the shortlisted crops to be processed in the food parks – onions, rice and bananas – are covered under the Act. Since the ECA allows stock-holding limits to be imposed by the government if a certain commodity is in short supply, it could affect business prospects in the food parks.

“Now that the Centre has agreed that ECA would not apply on commodities processed in the food parks up to a certain quantity requested by the UAE, the problem has been sorted out,” the source said.