For the UAE, India is the World’s Economic Powerhouse

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  1. ejazr

    ejazr Stars and Ambassadors Stars and Ambassadors

    Oct 8, 2009
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    Hyderabad and Sydney
    The Media Line

    Traditional trade ties have flourished and are now expanding to tourism, investment

    DELHI -- Laila Al-Uthman points to a display at an apparel store here and in broken Hindi asks for the t-shirt. Turning to her friend, Jameela, she rattles off the list of prices in her native Arabic.

    Laila and her husband, Hamed, who are from the United Arab Emirates (UAE), are regular visitors to Delhi and Mumbai. Hamed is a travel operator looking to increase his presence in India and lure more Indians to the UAE amid increasing affluence in India.

    “We’ve been coming to the country [India] at least two or three times a year for the past five years,” she told The Media Line. “For me it is travel, but for my husband, it is business.”

    It is no longer uncommon in India’s biggest cities and tourist destinations to see black-clad Arab women in shops, haggling with the locals over 50 rupees ($1). But they are just one aspect of burgeoning commercial ties between India and the federation of Gulf emirates that runs the gamut from merchandise trade, tourism, investment and labor exports.
    Indeed, for the UAE, it is India rather than China that is the preeminent economic partner. In 2011, two-way trade between India and Dubai – the emirate that acts as the confederation’s entrepot, reached 206 billion dirhams ($56 billion), more than double China’s 100 billion dirhams. India accounted for nearly a fifth of Dubai’s total, according to Dubai customs.
    Over 1.75 million Indians live in the UAE, making it the confederation’s largest expatriate community. The Dubai Chamber of Commerce and Industry has 20,038 Indian companies registered. UAE investors have pumped some $2 billion into India in areas ranging from energy, computer services and programming to construction and tourism, making the tiny confederation the 10th-largest foreign investor in India.
    In fiscal 2010-2011, trade between India and the UAE crossed $67 billion, according to Indian government figures, yielding India a badly needed surplus as $34 billion of Indian exports reached the UAE and $32 billion worth of UAE exports were shipped to India. Trade, social and cultural ties between the two sides go back centuries.
    Strangely for two countries with no significant gold deposits, it is the yellow metal that constitutes a large part of the trade.Gold is Dubai’s biggest trade item, with imports and exports worth a total of $39 billion last year, most of that with India. Major Indian exports to Dubai include gems and jewellery, petroleum products, machinery and instruments, much of it for re-export.
    Wearing an expensive business suit, a sparkly watch and hair perfectly coiffed, Hamed Al-Uthman exudes the aura of wealth that Indian partners look for in their Middle East counterparts. He has been meeting with Delhi travel operators to develop travel packages.

    His efforts will likely be helped by the four-day-long Arabian Travel Market 2012 exhibition, which opens April 30 in Dubai and will be showcasing India. The India pavilion will be highlighting luxury, wildlife and medical tourism in India, according to Vikas Rustagi, the regional director for India Tourism, Dubai.

    “It’s interesting to watch the past few years as Emiratis and other people in the UAE travel to India more and more, because it offers a lot of shopping and nice hotels, while Indians are coming to the UAE for our shopping,” says Al-Uthman. “But what is most exciting now is how the governments are getting involved.”

    Earlier this month, India’s Foreign Affairs Minister SM Krishna was in the Gulf to promote trade and tourism, and signed agreements ending double taxation and boosting consular services – issues that had been trouble spots for India and the Gulf region. At a joint news conference with his UAE counterpart, Sheikh Abdullah Bin Zayed Al-Nahyan, the two talked about a broad strategy of trade and investment over the coming years.
    “Looking at the trajectory of India’s [annual] growth of 7-8%, India has to expand the imports of oil and gas sourced from countries like the UAE, with whom we enjoy extraordinary ties,” Krishna said. Sheikh Abdullah suggested that the time had arrived to “push forward the UAE-India relationship in new ways”.
    Expecting to invest around a trillion dollars over the next decade in infrastructure alone, India is looking to the UAE for financing. Sheikh Abdullah is due to visit India this month to examine the sovereign wealth fund of Abu Dhabi, the wealthiest of the UAE members, investing in India.
    “With India, we have a market of over one billion people. That is a vast number of people who we can start to work with and develop bilateral relations between the two sides to increase how we can do business,” says Al-Uthman. “I have seen a lot of optimism here for travel between both countries, and just look at my wife and friends, they love to come to India.”

    Economic ties have come hand in hand with closer political and even sports links.

    India carries a chip on its shoulder in the Arab world because of its rivalry with Muslim Pakistan and disputes over the Muslim-majority region of Kashmir, which India controls and Pakistan claims for itself.

    Nevertheless, India is already dealing with UAE on defense issues. There have been goodwill visits by Indian Navy ships to the UAE from time to time and in recent years, bilateral defense cooperation has been strengthened.

    Cricket has also brought the two countries together, with India having played numerous matches against Pakistan in the UAE emirate of Sharjah.

    Ramesh Jawad, an Indian Tourism Ministry spokesman, told The Media Line that New Delhi sees the UAE as a partner for developing its tourism industry to cater not only to UAE travelers but for high-end tourism generally. New Delhi wants to expand its travel industry from such heavy reliance on the backpacking community.

    “Unlike Iran and Saudi Arabia, for example, the UAE has so many opportunities. The country continues to invest and develop infrastructure on a large scale,” he says. “We can learn a lot on how to increase our own tourism sector for the upper classes who want to come to India but where there aren’t a lot of high-end travel packages.”

    With that market segment in mind, his ministry is offering reduced taxes and easier regulations for businessmen like Al-Uthman to take advantage of.

    Al-Uthman says that many of his colleagues in the UAE travel industry see the Indian market as an almost Shangri-la for travel, where developing high-end packages for the elite in the UAE could bring in billions of dollars annually for both countries.

    “If we look at the current trends, more and more people are looking at India as a cheap destination,” he explains. “But for UAE families and the more affluent, they still would like to stay in places that give them the same standards they have at home. India has developed this sector tremendously in recent years, but now we have to push forward by partnering to make it a reality.”

    Wives, Al-Uthman says, will be an important factor in this process. “If we can convince women in the UAE that traveling to India is a great opportunity, for shopping among other things, travel could be a key economic benefit for both business and people.”
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