New economic synergies

IT HAS been thirty-three years. When His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, visits India tomorrow he will, in many ways, be visiting the country for the first time, so unrecognisable is the new economic and social landscape.

By Patrick Michael (EDITOR - MAGAZINES)

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Published: Sun 25 Mar 2007, 9:31 AM

Last updated: Sun 5 Apr 2015, 4:09 AM

Today, India is the sixth largest exporter of goods and services to the UAE, and in turn, the UAE is the second largest destination for India’s exports (after the USA). UAE-India trade now stands at over $13 billion per year - the pace of that growth has been scorching indeed, for in 2002 trade between the two countries was $2.5 billion. In the early 70s, it was barely $180 million a year.

The new economic synergies are plain to see, with both countries exploring opportunities for large-scale investments in the other. Emaar, Dubai Holdings, DP World, Abu Dhabi Investment Council and Dubai Aluminium are amongst the companies currently pursuing many large-scale investment projects in India in infrastructure, mining, real estate, ports and airports, tourism and knowledge-based sectors.

From the Indian side, most major corporates are present in the UAE by way of plant, trade or representative office — more than 3,300 Indian companies are estimated to have set up manufacturing units or opened local offices in the UAE (600 are hosted by the Jebel Ali Free Zone).

Likewise, the National Bank of Dubai (its merger with Emirates Bank will create the largest bank in the region) has entered into a partnership with HDFC Bank, one of India’s premier banks, to extend its service offers to the expatriate community.

Meanwhile, India’s booming real estate sector appeared quickly on the radar of UAE property developers Nakheel and Emaar - the former is forging a joint venture with DLF of India to construct two integrated townships in India at an investment of $10 billion, while the latter (also through the joint venture route, called Emaar-MGF) is looking for leadership in the residential development segment of the Indian market. And UAE airlines are readying themselves to reap the benefits of the new air services deal between the two countries which will mean an additional 18 flights a week to absorb the soaring demand.

Shaikh Mohammed’s visit comes at a staging point in India’s modern economic flowering. Current trends indicate to authoritative analysts like investment bank Goldman Sachs that India’s economy will overtake the G6 economies faster than envisaged. The country’s programme of reforms has brought increased competition and efficiency — and India today has a ravenous appetite for energy, infrastructure, investment and ideas of socio-economic change. India’s cities radiate all the signals of economic boom: hosts of new cars choke the streets, amenities-rich middle-class housing and shopping malls are changing the face of urban landscapes, and its airports are struggling to funnel tens of thousands of new travellers. Even so, this phase shift is seen as only the start of a transformation that will reshape the global economy.

THE India of 1974 — the year Shaikh Mohammed last visited the country, soon after UAE-India diplomatic ties were established in 1973 — was a vastly different land. Then prime minister Indira Gandhi had nationalised banking and introduced limited land reforms, but was beset by politically fuelled civil disturbances and a serious food shortage. Through it all the country had tested a nuclear device and the scent of the 1971 war still hung in the air, even while rural poverty wracked the hinterlands.

On Monday, ‘Dubai’s CEO’ is going to find himself carefully listened to by Indian businessmen and industrialists during a meeting organised jointly by the Associated Chambers of Commerce, the Confederation of Indian Industry and the Federation of Indian Chambers of Commerce and Industry.

Dubai’s record of heavy investment in the infrastructure of a modern economy, its first-class port, airport and airline, its lightly-regulated enterprise zones will all appeal to the new globe-spanning Indian economic vision. Dubai’s carefully calibrated mix of infrastructure, economic freedom and tolerance (which has attracted multinationals like General Electric and AT&T into setting up their Middle Eastern base here) is already seen as an exemplar of growth.

Official India knows this too - during the first seven months of 2006, the vice-president of India, ministers of Commerce and Industry, Overseas Indian Affairs, Agriculture and Cooperation and Human Resource Development visited the UAE. Hence Shaikh Mohammed and his delegation will update themselves with a review of the Double Taxation Avoidance Agreement and the Bilateral Investment Promotion and Protection Agreement being negotiated with India - the fine print that footnotes a new UAE perception of India as a rising Asian economic and political power and an increasing recognition of shared values.

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