India, UAE MOU: New dimension to economic and commercial relations
The Government of India has approved the proposal for signing an MoU between India and the United Arab Emirates (UAE) on cooperation in the field of industries and advanced technologies.
Growing India-UAE economic and commercial relations contribute to the stability and strength of a rapidly diversifying and deepening bilateral relationship between the two countries. India-UAE bilateral trade, valued at $180 million (Rs.1,373 crore) per annum in the 1970s, has increased to $60 billion (Rs.4.57 lakh crore) making the UAE, India’s third-largest trading partner for 2019-20 after China and the US.
Moreover, the UAE is the second-largest export destination of India (after the US) with an export value of $29 billion (Rs.2.21 lakh crore) for 2019-2020. The UAE is the eighth largest investor in India with an estimated investment of $18 billion (Rs.1.37 lakh crore). Indian investments in the UAE are estimated at around $85 billion (Rs.6.48 lakh crore).
The two signed a bilateral “Comprehensive Economic Partnership Agreement” (CEPA) on February 18, 2022. This agreement has the potential to increase trade between India and the UAE from $60 billion (Rs.4.57 lakh crore) to $100 billion (Rs.7.63 lakh crore) in the next five years.
The MoU envisages cooperation on a mutually beneficial basis in the following areas — strengthening the supply chain resilience of industries, renewable & energy efficiency, health and life sciences, space systems, artificial intelligence, industry 4.0 enabling technologies and standardization, metrology, conformity assessment, accreditation, and halal certification.
The MoU also aims at strengthening and developing industries in both nations through investments, technology transfer, and the deployment of key technologies in industries. This is likely to generate employment across the economy.
The implementation of MoU may lead to an increase in research and innovation in all areas of mutual cooperation, particularly in the areas of renewable energy, artificial intelligence, industry enabling technologies, health, and life science. This may lead to the growth of these sectors, increased domestic production, enhanced exports, and a reduction in imports.
India’s exports to the UAE are well diversified with a large basket. Major export items to the UAE are petroleum products, precious metals, stones, gems and jewellery, minerals, food items (cereals, sugar, fruits and vegetables, tea, meat, and seafood), textiles (garments, apparel, synthetic fibre, cotton, yarn) and engineering and machinery products, and Chemicals.
India’s major import items from the UAE are petroleum and petroleum products, precious metals, stones, gems and jewellery, minerals, chemicals, wood and wood products. India also imported 21.83 MMT ($10,927.52 million) of crude oil from UAE in 2019-20.
The UAE is home to an Indian expatriate community of more than 2.6 million – the largest expatriate community in the UAE. Professionally qualified personnel constitute about 15 to 20 percent of the community, followed by 20 percent of white-collar non-professionals (clerical staff, shop assistants, salesmen, accountants, among many others), and the remainder 65 percent comprises blue-collar workers.
There is a significant business community in India. The Indian community has played a major role in the economic development of the UAE.
The UAE’s investment in India is estimated to be around $17-18 billion of which $11.67 billion is in the form of FDI while the remaining is portfolio investment. The UAE is the 9th biggest investor in India in terms of FDI. The UAE sovereign wealth funds invested over $4.12 billion in India during FY 2020-21.
The UAE’s investments in India are concentrated mainly in five sectors: services (15.78 percent), sea transport (8.80 percent), power (8.34 percent), construction (infrastructure) activities (7.15 percent), and construction development: townships, housing, built-up infrastructure and construction development projects (7.08 percent).
During the visit of Prime Minister Narendra Modi to the UAE in August 2015, it was decided to establish UAE-India Infrastructure Investment Fund, with the aim of reaching a target of $75 billion to support investment in India’s plans for rapid expansion of next-generation infrastructure, especially in railways, ports, roads, airports and industrial corridors and parks.
During the successive high-level visits, the leaders of both the countries reviewed the progress in realizing the target for UAE investments in India.
[With Inputs from IANS]
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