India-UAE have signed 13 agreements today and the $75 billion investment fund is still awaited.
The UAE and India held successful talks and signed 14 agreements on Wednesday. The deals were historic and India is doubling the pace to create a governance structure to roll out a mega $75 billion fund with Emirati investors on board.
The two sides first mooted such a fund two years ago during Indian Prime Minister Narendra Modi's visit to the UAE. Last year, the two sides agreed to set up a mechanism for funding projects that would benefit the Indian economy.
On Wednesday, after meeting His Highness Shaikh Mohamed bin Zayed Al Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces, the Indian PM said the fund is still a work in progress.
"We are working to connect the institutional investors in UAE with our National Investment and Infrastructure Fund," said Modi in his statement to the press. Such a fund will take time and patience, and the two countries are willing to work in tandem to give infrastructure here the much-needed boost.
The Indian side are positive that a deal will be reached soon. On Tuesday, Secretary in the Ministry of External Affairs, Amar Sinha, was gung ho about a deal but did not refer to concerns from the Emirati side which UAE Ambassador to India Dr Ahmed Al Banna had expressed earlier.
Al Banna had said the UAE was not comfortable without proper governance structures in place. He also hinted at an 'Open Sky' policy with India.
Progress has been slow but steady on the National Infrastructure and Investment Fund (NIIF). Its CEO Sujoy Bose was appointed in June last year. Bose was previously Director, Infrastructure and Natural Resources, International Finance Corporation, Washington, D.C.
The fund seeks to be an 'ideal blend of private sector entrepreneurship and sovereign support'. It aims to maximise risk-adjusted returns on investments over the long term by making investments in infrastructure and other sectors.
The governing council of the NIIF will be chaired by Indian Finance Minister Arun Jaitley. Arundhati Bhattacharya, Chairperson, State Bank of India, the country's largest public sector bank, Hemendra Kothari, Chairman DSP BlackRock and T. V. Mohandas Pai of Manipal Global Education Services have been named to the council. Other posts have not been filled in yet. Even the NIIF website is under construction.
Abu Dhabi is adopting a wait and watch approach after Etisalat's and DP World's forays turned sour in the past. The episodes during the Manmohan Singh government's tenure cast a shadow on future investments from the UAE.
But India's economy is expanding rapidly. Revised estimates even after demonetisation still put growth at a healthy 6.6 per cent of the GDP.
The fund with UAE support would have given much-needed traction to Asia's third largest economy. More roads, ports, and airports are what India hopes to build. The intent may there, but implementation still remains an issue as Modi talks of digital and smart governance.
Meanwhile, the UAE pumped in $1 billion into Indian infra projects in the last 11 months alone.
Indian companies would also like to partner in infrastructure projects for the World Expo 2020 in Dubai. "UAE can benefit by linking with our growth in manufacturing and services," Modi said.
The potential for investments is enormous. Bilateral trade is booming at $50 billion, and the two sides expect to double that figure soon.
As for UAE participation in the $75 billion fund, Abu Dhabi will be certainly on board once the NIIF puts in place a governance structure that works for the benefit of both sides and guarantees protection for Emirati investments.