Modi should emulate the Gulf nation to attract foreign investment and bring the country out of the economic crisis it is in
Indian stock markets are worrying investors, the auto sector is going through a bumpy ride, the aviation industry has already witnessed an emergency landing with the collapse of Jet Airways, and in between the land and sky, the rupee is sinking in the foreign exchange markets. All these indicate that the health of the country’s economy is not very sound, if not critical. Right now, the dream of making India a $5 trillion economy by 2025 seems quite distant and with the Gross Domestic Product (GDP) at five per cent, there is a dire need to get closer to all trade allies, including America, the United Kingdom (UK), Germany and the United Arab Emirates (UAE), if it is to be achieved.
Recently, during his trip to the UAE, Prime Minister Narendra Modi said, “India has found a valuable partner in the UAE to achieve its ambitious dream of becoming a $5 trillion economy.” He went on to add that, “There has been an increasing interest in investments in India in sectors ranging from renewable energy, food, ports, airports, defence manufacturing and other industries.”
Close on the heels of Modi’s visit to the UAE, the most recent development which came into focus was National Security Advisor (NSA) Ajit Doval’s trip to the Gulf nation and his meeting with Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Emirate of Abu Dhabi. Both these diplomatic initiatives are considered quite meaningful for reinforcing trade ties between the two countries, especially oil deals, as the UAE accounts for eight per cent of India’s oil imports and is the fifth-largest supplier of crude oil to the country. The NSA also met Tahnoun bin Mohammed Al Nahyan, chairman of the UAE’s state-owned oil company, the Abu Dhabi National Oil Company (ADNOC). His initiative is expected to foster the joint investment initiative of Saudi Arabia’s Aramco and ADNOC as they are planning to invest $44 billion in a refinery in India’s west coast.
After China and the US, the UAE is the third-largest trade partner of India and the trade between the two countries registered a 20 per cent growth in the fiscal year 2018-19. Consequently, Indian exports grew by seven per cent whereas the UAE’s exports increased by 37 per cent. Now, the two countries are keen to exceed the $100 billion-mark in bilateral trade by 2020.
Also, as the UAE accommodates around 3.3 million Non-Resident Indians (NRIs), it is the highest contributor to India’s remittance inflow.
The UAE is known for maintaining good relations with its trade allies. Be it the US, the UK, Japan, Germany, China or France, the Gulf state has cordial business relations with all the leading economies of the world. Consequently, due to its friendly trade policies and good infrastructure, the UAE acquired 17th position in the Global Competitiveness Index (GCI). Its smart strategies of enticing foreign investors and retaining them by providing quality infrastructure enables it to perform better even in a difficult scenario.
The demands of foreign businesses and investors are advanced infrastructure, business-friendly policies, 100 per cent foreign ownership, zero or minimal taxation and political stability. The UAE has all these advantages and that’s why it attracts investors. Also, its policy reforms like unification of local financial markets, new laws to facilitate mergers and acquisitions, the establishment of the public debt management office and creation of a more efficient labour market have played a vital role in strengthening the country’s economy.
India provides ample business opportunities due to the large domestic market, availability of natural and human resources, improved transportation and logistics, plus easy and affordable access to the internet. Besides, it is emerging as a hub for start-ups and the job market is full of competitive talent. In the last few years, the Government has launched some commendable programmes such as ‘Make in India’ and ‘Start-up India’ to boost economic growth but they failed to bring the desired results, primarily due to lack of funds. Unfortunately, these initiatives couldn’t impress international investors, and many promising ventures were shut down due to the non-availability of working capital. Indeed, attention was not paid by policymakers on factors responsible for assuring foreign investment.
Thereby, to provide the required stimuli to the Indian economy, Modi should emulate the UAE to attract foreign investment and bring the country out of the economic slowdown. Foreign investment is the most pressing need today and all possible steps should be taken to invite it. India has close business allies such as the US, UK, Japan, Israel and Russia and they have enough investment potential. New Delhi needs to convince them that the country is full of highly rewarding opportunities.
(The writer is president, Indo-Arab Chambers of Commerce and Industries)
