The United Arab Emirates (UAE) has given an intent to invest another $25 billion in India in the near future, while the two countries are set to deepen cooperation in shipping, ports, and energy, according to Union Minister of Commerce and Industry Piyush Goyal.
Speaking after the 14th meeting of the India-UAE High Level Joint Task Force on Investments on Monday, Goyal said the UAE was looking at investments in ports, shipbuilding, space, logistics, Indian startups, and the Indian stock market. The two sides also identified six areas for cooperation in the shipping sector and will set up a working group between the two countries.
The six areas are ship ownership, development of modern ports, manufacturing of ships, repair and maintenance of ships, ship breaking, and container manufacturing, Goyal said.
On the additional investment, Goyal said: “They have also given intent to invest another $25 billion in the near future with the ultimate objective of taking investments from UAE to $100 billion in the years to come.”
Some of the additional investment has already started coming in, he said, citing an investment of about $3 billion in RBL Bank and approximately $1 billion in Sammaan Capital.
On trade payments, Goyal said the use of local currency settlement between India and the UAE was increasing and was now in “double digits”. He said traders and travellers were gradually understanding its benefits.
“We can do that trade only in rupees and dirhams. When goods from India reach the UAE, we can bid in rupees. When goods from the UAE reach India, we can bid in dirhams. We can trade between rupees and dirhams in 3-6 months, and can convert currency from one country to another in US dollars. Periodically, it can be converted to the international dollar currency.”
Goyal also said India and the UAE were exploring greater cooperation in energy security, including strategic petroleum reserves, LPG and LNG supplies, and subsea pipelines.
“Given the geopolitical situation currently and the uncertainties of the world that we are now continuously seeing, we had Covid, then we had the Ukraine war which still continues, now we have the West Asia crisis. UAE being a trusted partner, we are working with them to look at expanding strategic petroleum reserves in India,” he said.
“The studies are going on and we will be seeing significant rampup of investments from the UAE in this area,” he added.
On ports, the minister said India’s port capacity had doubled in the last decade, and the country would need to double it again over the next decade as the economy grows.
“We will need to again double our port capacity in the next decade. And UAE will be an important investor, a trusted investor as we develop new ports or expand our existing ports,” he said.
He cited Vadhavan in Maharashtra, ports coming up on the eastern coast in Odisha and Andhra Pradesh, and ports being developed along the western corridor between Karnataka and Kerala as potential areas for India-UAE cooperation.
The minister also said India and the UAE had agreed to have a more structured and formal working group on issues, including civil aviation cooperation. A dialogue is already underway between India’s civil aviation ministry and its UAE counterparts, he said.
The latest meeting also discussed cooperation in space technology, food security, agri-innovation, logistics, artificial intelligence (AI) and emerging technologies, and FinTech.
The latest developments come against the backdrop of expanding India-UAE economic ties. Bilateral trade between the two countries has reached $100 billion, with a target of doubling it to $200 billion by 2032. The target was endorsed by Prime Minister Narendra Modi and UAE President Sheikh Mohamed bin Zayed Al Nahyan earlier this year.
Goyal co-chaired the meeting along with Sheikh Hamed bin Zayed Al Nahyan, managing director, Abu Dhabi Investment Agency (ADIA) – one of the world’s largest sovereign wealth funds that invests on behalf of the government of Abu Dhabi.
The India-UAE Comprehensive Economic Partnership Agreement (CEPA), which came into force in May 2022, is now four years old, Goyal said.
The UAE has already invested $25 billion in India and is the country’s seventh-largest source of foreign direct investment (FDI), according to Goyal. He added that the UAE’s interest extended beyond traditional investment areas.
On geopolitical tensions, the minister said that they do impact trade. But the trade between the UAE and India is coming back to the pre-war levels.
“We are very close to it (pre-war levels), another few months and we should get back and beyond the pre-war levels. Obviously, this is a very critical issue that trade has been impacted because of this war. And we are finding ways and means to restore it both to the pre-war level and then grow it in the years to come.”
On India’s broader export performance, Goyal said merchandise exports had increased by “upward of 15 per cent” in the first six months of the year up to September 21. He described this as an informal data point and said the final figures are yet to be released.
India recorded $863 billion in goods and services exports last financial year, Goyal said, adding that the government had set a target of increasing this to $1 trillion this financial year.
