MOE Releases Crucial Report on UAE India Economic Relations

ABU DHABI 6th February 2016 (WAM)--xxxx. Ceramic. The attractive investment environment in the UAE owing to several factors such as the economic and political stability and the geographic and strategic location as the gateway to the regional and international markets has made it an ideal place for investments as the study has indicated.

Backed by excellent geographical location the highly developed infrastructure and ease of investment made the UAE the second largest country in terms of Indian investments in the Arab region with a total FDI flow of US$5.7 billion in 2013 and a growth rate of 20.30% compared to 2012.

The Republic of India is a country located in South Asia and is made up of 28 states and seven union territories with a parliamentary democratic system. It is the seventh largest economy in the world with a total GDP of (at current prices) according to World Bank statistics approximately 2182.577 billion US$ during 2015 achieving a 6.4% growth in 2015 as against 2014.

India is one of the developing economies in Asia that maintained economic stability even during the global financial crisis. This was made largely possible because of the huge financial stimulus provided by the government as well as low interest rates rise in industrial production and decrease in reliance on imports.

The study further states that as per the statistics released by the World Trade Organisation in its World Trade Report 2015 India was ranked 19th globally in terms of global exports with a total value of US$317 billion and a contribution of 1.7% to world exports. India was ranked 12th globally in global imports with a total value of US$460 billion and a contribution of 2.4% to world imports.

India is the number one trade partner of the UAE with a relative share of 9.8% of the total UAE non-oil trade. It also ranked first in the UAE's overall exports with a relative share of 14.9% and ranked second in the UAE's re-exports to the world accounting for 8.7% of the UAE's total re-exports. India also ranked third in the UAE's total imports with a relative share of 9.2%.

Total FDI in India in 2014 was nearly US$34.4 billion with a growth of 22.1% against US$28.2 billion in 2013. In contrast Indian overseas investments rose from US$1.68 billion in 2013 to nearly US$9.8 billion in 2014 at an annual growth rate of 487% according to the "Global Investment 2015" report released by UNCTAD.

The study shows based on UNCTAD's World Investment Report data that India has assumed a leading position in the world by virtue of its ability to attract foreign direct investment. It occupies 10th place in the world due to several factors: it is one of the largest economies in the world occupying a distinct strategic position. India is also a large consumer market with a high growth rate and has an abundance of trained skilled manpower available at a competitive price.

It has one of the largest manufacturing sectors in the world covering all industrial activities; it also has one of the largest pool of scientists engineers and technicians in the world. India is blessed with rich agricultural and mineral resources and possesses excellent infrastructure which includes a sophisticated financial sector and a flexible political and commercial environment wherein the investors are provided with all facilities and tax incentives including import-export facilities.

India offers a sophisticated legal environment and ensures easy transfer of capital. India offers income tax exemptions on export earnings. Similarly India offers a full exemption from customs duties on industrial inputs.

The study notably points out that India offers many attractive sectors for FDI including the financial and non-financial sectors such as the services telecommunications transport industry fuel chemicals construction activities drugs and pharmaceuticals food processing cement products gypsum and electrical equipment.

On India's foreign trade the study pointed out that India is one of the world's most important and influential countries in terms of trade volume as it ranked 12th in imports and 19th in exports in 2014 according to the International Trade Centre statistics. India's exports during 2014-2015 touched nearly US$310.34 against US$314.41 billion in 2013-2014 marking a 1.29% downfall.

During 2014-15 India's exports were mainly concentrated in ten commodities which represented 43% of India's overall exports of which petroleum oils and oils obtained from bituminous minerals topped the chart with a total value of US$55.93 billion and a relative share of 18% of its total exports. Diamond occupied second place with a total value of US$24.23 billion with a relative share of 7.8% of its total exports and a decline of 7.3% compared to the 2013-2014. Jewelry and precious metals came in third with a total value of US$13.2 billion and a relative share of 4.3% and a growth rate of 22%.

On the other hand India's imports during 2014-2015 stood at US$448.03 with a marginal decrease by 0.48 per cent against US$450.2 during 2013-2014. Nearly 54% of India's imports concentrated in ten commodities of which crude petroleum oils and oils extracted from bituminous minerals topped the list of India's imports amounting to US$116.44 billion with a high relative share of 26% and a decline of 18.9% during 2013-2014. Gold - raw dust and semi-processed - came in second place with a total value of US$34.4 billion and a relative share of 7.7% with a 20% growth in the import of the commodity compared to 2013-2014.