Brief on India-UAE Commercial Relations
India and UAE have shared trade links through the centuries. The trade, which was dominated by traditional items such as dates, pearl and fishes, underwent a sharp change after the discovery of oil in UAE (oil exports begun from Abu Dhabi in 1962). With the emergence of UAE as a unified entity in 1971, exports from India started growing gradually over the years. The real impetus, however, started after Dubai positioned itself as a regional trading hub by early 1990s and about the same time, the economic liberalization process started in India.
Growing India-UAE economic and commercial relations contribute to the stability and strength of a rapidly diversifying and deepening bilateral relationship between the two countries. Both sides are striving to further strengthen these ties for mutual benefits. India-UAE trade, valued at US$ 180 million per annum in the 1970s, is today around US$ 73 billion making UAE, India's third largest trading partner for the year 2021-22 after US and China. Moreover, UAE is the second largest export destination of India (after US) with an amount of over US$ 28 billion for the year 2021-22. For UAE, India is the second largest trading partner for the year 2021 with an amount of around US$ 45 billion (non-oil trade).
Both nations have signed Comprehensive Economic Partnership Agreement (CEPA) on 18th February 2022 during the Virtual Summit between Hon’ble Prime Minister Shri Narendra Modi and H.H. President Sheikh Mohamed bin Zayed al Nahyan. The agreement entered into force from 1st May 2022. CEPA will unlock new opportunities in bilateral trade and it is expected to increase the bilateral trade in goods to US$ 100 bn within five years and trade in services to US $ 15 bn.
India's Major Exports and Imports to the UAE:
India's exports to the UAE are well diversified with a large basket. India's major export items to the UAE are: Precious Metals, Stones, Gems & Jewellery, Minerals & Refined Petroleum Products, Food Items (Cereals, Sugar, Fruits & Vegetables, Tea, Meat, and Seafood), Textiles (Garments, Apparel, Synthetic fibre, Cotton, Yarn) and Engineering & Machinery Products and Chemicals. India's major import items from the UAE are: Petroleum and Petroleum Products, Precious Metals, Stones, Gems & Jewellery, Minerals, Chemicals, Wood & Wood Products. India imported 21,664.42 MMT (US$ 12,304.83 Million) of crude oil from UAE in 2021-22.
The UAE’s investment in India is estimated to be around US $ 20-21 billion of which US 15.18 billion is in the form of FDI while the remaining is portfolio investment. UAE is the 7th biggest investor in India in terms of FDI. Abu Dhabi Investment Authority is the principle sovereign wealth fund of the UAE and one of the world’s largest. ADIA has committed to invest US $ 75 billion in India’s infrastructure sector. In 2020, GOI has announced serveral measures to facilitate and further ease investments by ADIA and other sovereign funds from UAE. The UAE entities are expected to invest up to USD 7 billion in India's food sector in the next three years, in development of India-UAE food corridor, development of cold storage, warehousing, food-processing, fisheries and poultry with the objective of tripling the value of UAE’s food imports from India in five years.
Though no official figures are available, investments by Indian companies in UAE would be in excess of US$85 billion. Many Indian companies have set up manufacturing units either as joint ventures or in Special Economic Zones for cement, building materials, textiles, engineering products, consumer electronics etc. Many Indian companies invested in the tourism, hospitality, catering, health, retail and education sectors of UAE (i.e. Taj Group, Bits Pilani, Zee entertainment, Ashok Leyland, Mahindra, Dabur etc.). Major Indian companies such as L&T, ESSAR,Punj Lloyd, Engineers India Ltd., TCIL etc. have been able to obtain significant number of contracts in UAE. Several prominent private and public sector Indian companies and banks are also operating in the UAE.
Last updated in November 2022