Dubai: India and the Gulf Cooperation Council need to resurrect stalled talks for a free trade agreement which would take bilateral relations to a new level, believes the United Arab Emirates.
“We need to [recommence] the negotiations from some years back. I don’t have a clear time-frame as it sits within the GCC secretariat, but given how well we are doing without [an FTA], if we can sign, it will take the relationship to a totally new level,” Juma Mohammed Al Kait, assistant undersecretary for foreign trade affairs at the UAE’s Ministry of Economy said at the UAE-India Economic Forum 2017 here.
The FTA talks had started a decade ago but were stalled against an uncertain investor climate in India before the Narendra Modi government came to power. Trade and investment ties have deepened since then with the pace of regulatory reform in India quickening.
There is “enormous potential” to deepen trade and investment links between India and UAE that could leverage “major economic shifts the two countries are undergoing,” said Al Kait, reports the Emirate’s WAM news agency.
“The UAE is marching towards post-oil period, supported by innovation, knowledge and entrepreneurship; meanwhile India is working on the establishment of a local common market, demonetisation and activating the economic roles of women, among others.”
“India is significant for us, and, what’s more, there is no trade imbalance,” he said, delivering the keynote address at the Forum which kicked off on Wednesday.
The six-member GCC includes Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman.
Trade between the UAE and India is set to grow by about 6 per cent annually in the coming two years.
“We have witnessed great growth [in UAE-India trade] over the last 10 years – if you add it up it reaches half a trillion dollars,” said Al Kait. “During the upcoming year or two this number will increase and we will keep growing at the same momentum – around 6 per cent.”
Bilateral trade for 2016 including oil reached US$50 billion, Al Kait said. Trade between the two countries, excluding oil, stood at $36bn. India accounts for about 10 per cent of the UAE’s foreign trade. The country, which has been among the top three UAE trading partners in the past few years – is currently the largest partner.
About 9 per cent of the UAE’s total exports go to India, while 8 per cent of the UAE’s imports come from India.
Gold makes up the bulk of bilateral trade, which accounts for just under half of all trade, Mr Al Kait said. The UAE has developed various platforms for the buying and selling of gold between the two countries.
“We are trying to go beyond this, to go upstream and further develop the gold trade through many different kind of products,” he said.
Indian investments in the UAE reached $6.4bn in 2015 compared with $5bn in UAE investment in India. Market reforms by the Indian prime minister Narendra Modi may entice more foreign investors and may lead to an increase in the UAE’s investment in India, Al Kait said.
“We have a huge investment [in India] but we think this is not enough,” he said. “There is room for doubling this number…A lot of tough economic reforms have been made to increase transparency and tackle other issues faced by emerging economies and this is encouraging for the business community here.”
According to Al Kait, the forum looks forward to further partnerships between both the countries in sectors like industry, travel and tourism, agriculture, renewable energy, transport, education, health, technology, water, space and small and medium sized enterprises.
