This historical friendship is built on tradition and a mutual flair for commerce
The UAE’s economic, political, and cultural links with India date back to more than a century ago when bilateral trade began.
Dubai, in particular, has traditionally served as a meeting point for trade between the Middle East and the Indian subcontinent, with trade dominated by merchants in the gold and textile sectors.
With such a strong and historical influence it is no surprise that India is the largest trading partner with the UAE. Annual bilateral trade between the UAE and India, including oil, now stands close to $75 billion.
In 2012, India was Dubai’s largest export destination accounting for 20 per cent with a value of Dhs32 billion. It was also the largest re-export destination at 15 per cent with a value of Dhs51 billion, and the third largest import destination with 9.3 per cent at Dhs68 billion.
Dubai’s free zones, including Dubai International Financial Centre, have been instrumental in attracting the majority of India’s top banks and thousands of Indian companies to the city, due to tax-free policies and easy start-up frameworks.
Indian firms are increasingly leveraging Dubai as a gateway to other markets in the region, with many Indian exports transshipped from Dubai onto other countries in the Gulf, South-East Asia and East Africa.
According to an HSBC trade forecast, “As the UAE continues to diversify away from mineral manufactures and invest heavily in its infrastructure, growth in imports of goods for infrastructure and investment equipment from India will significantly outstrip growth in other imports during 2013–30. The UAE also pledged $2 billion of investments in Indian infrastructure in 2013 alone.”
Tim Reid, regional head of commercial banking of HSBC MENA said: “India and the MENA nations have been trading for many centuries and the opportunities certainly remain strong today. It’s no surprise that India is a top trading partner. With its huge population, rapidly growing middle class and capabilities in industrial and post-industrial sectors, India is a market with considerable potential.
“The prospect of Expo 2020 in Dubai and other infrastructure projects in the region offer excellent opportunities for MENA businesses to bring the chance to benefit from India’s know-how into the region with new partnerships. India’s strength in industrial and information technology can also help MENA businesses support the region’s political programme of economic diversification.”
According to HSBC, India will become an even more important trading partner for the UAE by 2030. The country will go from taking more than 10 per cent of total exports now to 14 per cent by 2030, the bank estimated.
The UAE is forecast to maintain this pre-eminent position out to 2030 due to robust demand growth for Indian exports, including gems and jewelry, electronic goods, fabrics, machinery and equipment.