(MENAFN- Khaleej Times) Bilateral trade between India and the United Arab Emirates (UAE) has received a big push thanks to a year-old economic agreement between the partners that are also strengthening their cultural connect in a sign of further deepening of ties, according to high-ranking Indian officials. In a wide-ranging discussion with the Khaleej Times, the top officials also touched upon the convergence points for the two nations vis-à-vis start-ups, stressed that a liberal foreign direct investment (FBI) policy made India an attractive business destination, and said a host of factors - including reforms and strong macroeconomic fundamentals - were instrumental in India's growth in the face of global challenges.
Sunjay Sudhir, India's Ambassador to the UAE; Rajesh Kumar Singh, Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) - which functions under India's Ministry of Commerce and Industry; DPIIT Joint Secretary Sanjiv; and Srikar K. Reddy, Joint Secretary in the Commerce Ministry, also weighed in on New Delhi's talks with the Gulf Cooperation Council (GCC) on a free trade agreement (FTA).
Watch the exclusive conversation here:
UAE-India CEPA Joint Secretary Reddy said bilateral trade registered a growth of 16% to reach a high of around $84 billion in financial year 2022-23, responding to a question on the Comprehensive Economic Partnership Agreement (CEPA) between India and the UAE that came into force on May 1, 2022.
Reddy, a key CEPA negotiator for India, was part of a delegation visiting the UAE to take part in celebrations commemorating one year of what is being viewed as a historic agreement. The team was led by Secretary Singh.
India's imports from the UAE grew 18% to reach over $53 billion in 2022-23, while "our exports also grew 12% to reach $31.3 billion", Reddy said, highlighting the achievements in gems and jewellery and automobile sectors, among others, in the context of exports. He mentioned that sectors such as iron and steel and apparel had fallen short of expectations, even though he hoped for a turnaround in these areas in the 2023-24 financial year.
The gains from CEPA go beyond statistics, Ambassador Sudhir said. "...there have been a lot of positive spin-offs from CEPA, which is further deepening trust," he added, as he put emphasis on "the strengthening of the cultural connect" between the two sides.
He cited a Bollywood exposition in Louvre Abu Dhabi and the hosting of the International Indian Film Academy Awards (IIFA) by the UAE in 2022 and 2023 as examples - and also highlighted academic cooperation by bringing up the decision to open a campus of India's prestigious Indian Institute of Technology (IIT) in Abu Dhabi. He said progress was visible on many fronts, including Fintech, space, education and health, among other areas.
Start-up ecosystem India has tried to create a start-up ecosystem that is one of the best in the world, DPIIT Secretary Singh, who took charge last month, said. "...we have the third largest start-up ecosystem in the world. We have over 100 unicorns [start-ups valued at over $1 billion]. Many more are coming," said Singh, whose department looks into matters related to start-ups, among other areas such as FDI, ease of doing business, and investment promotion and international cooperation.
"...in terms of creating a bridge between our start-up ecosystem and the UAE, a lot of initial dialogue has been done. We can probably do more. I'm told that the UAE also has at least two or three unicorns. I'm sure many of our existing start-ups are already looking at the UAE...this is an area where we think there are a lot of complementarities, and we can work together," he said, answering a question on how Dubai fits into broader plans for India's start-up ecosystem.
Ambassador Sudhir said Dubai's Elevate sessions, wherein Indian start-ups have pitched ideas in the past, meant that there was a clear linkage between Dubai and the Indian start-up economy. "...what we are witnessing is that there is an increasing number of investors in the UAE who not only have shown interest but also have put their money in Indian start-ups. And you also see that a lot of Indian start-ups have opened offices here," he added.
Speaking of I2U2 (a grouping of India, Israel, UAE and the US), Sudhir said discussions had been held on start-ups and that India had offered to set up a start-up hub in the vicinity of its capital city of New Delhi. "So maybe in the times to come, you will see some concrete outcomes in the I2U2 context also - where both Israel and the UAE, as well as the US, are engaging very actively on projects," he said.
DPIIT Joint Secretary Sanjiv emphasised that a change in mindset was evident in India. "A few years back, nobody wanted their children to start up a venture. It is the success of the ecosystem and the rules which we have made that everybody is wanting to have a start-up...once they do it, the natural corollary is to look further - and there can be no better destination than Dubai, which is the gateway not only to the Middle East but also to African countries," he said.
Foreign direct investment India, which registered its highest-ever inflows of around $84 billion in 2021-22, has an FDI policy that is "practically open sky", DPIIT Secretary Singh said to a question on challenges and opportunities in relation to foreign investments in the post-Covid era.
"There's nothing that we keep out, except some strategic areas such as defence etc. - where FDI is possible but with some government approvals. If you see our manufacturing sector, we've recently started a very ambitious programme called Production Linked Incentive Scheme, which covers about 14 sectors. It will cover more in the near future. That policy initiative has already generated a lot of good FDI in these sectors. It has had a huge impact on exports, particularly in electronics and mobile...
"FDI is one area where India has become very liberal, and we intend to keep it that way...my own view is that given the growth rate that India has and its consistency, countries which do not invest there and investors who do not invest there are going to miss out," Singh said.
In his remarks, Ambassador Sudhir pointed out that the UAE was very much a partner in India's investment story.
India-GCC talks Asked if the India-UAE CEPA will have any bearing on New Delhi's talks with the GCC on an FTA, Joint Secretary Reddy pointed out that "each agreement is separate". "...with the GCC side, we need to sit together and come up with an agreement that is acceptable to India and also the GCC as a whole...But some elements of the India-UAE agreement can be used during the negotiation," he said.
The Indian government and the GCC - which comprises Saudi Arabia, UAE, Qatar, Kuwait, Oman and Bahrain - have agreed to resume talks on the much-talked-about FTA, with two rounds of discussions taking place back in 2006 and 2008.
Ambassador Sudhir said "if one member of GCC can do it, then it's possible", referring to the India-UAE CEPA. "it sets a great template for the rest of GCC. It's just now a question of extrapolating it. The tough part has been done already," he added.
The India growth story Strong macroeconomic fundamentals, reforms such as the introduction of Goods and Services Tax (GST) and demographic dividend are among factors that have made India a bright spot in the global economy that is faced with myriad challenges, according to the officials.
The International Monetary Fund (IMF) said earlier this year that India's economy will grow 5.9% in the 2023-24 financial year, making the country the fastest-growing economy. At the same time, it had forecast the global real GDP (gross domestic product) growth at 2.8% for 2023 and 3% for 2024.
Secretary Singh highlighted India's infrastructure push - focusing mostly on roads, as well as on railways and airports - and digital public infrastructure as some of the notables in India's growth story. He said Indian Prime Minister Narendra Modi's government ensured that strong macroeconomic fundamentals were in place and did not allow the Covid-19 pandemic to disrupt "our basic financial prudence". This, he said, helped India bounce back better after Covid ebbed.
"All these factors together have brought us to a relatively good spot right now when it comes to the global economy," he said.
Ambassador Sudhir said fundamental changes were happening in India and policies that had been put in place over the last eight or 10 years were yielding results. He underlined the "consistency" of the India story despite the pandemic and "current geo-political storms".
"If the fifth-largest economy in the world, if the country with the largest population in the world continues to grow, then I think that is a beacon of hope for the global economy," he said.
He also spoke of technological innovations making people's lives better in India, such as the CoWIN platform that steered India's massive Covid vaccination drive, as well as the Unified Payments Interface (commonly known as UPI), which enables real-time online transactions. He added New Delhi was sharing the UPI platform with several countries and that India was in discussions with the UAE as well.
Joint Secretary Sanjiv said India, with a population of over 1.4 billion people, was at a key juncture, pointing to the rise of an aspirational class with disposable income. "The delta of opportunity that India offers is unmatched," he said.
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