The United Arab Emirates (UAE) is seeking to double its non-oil trade volume with India to approximately $100 billion over the next five years as part of efforts to deepen relationships with rapidly growing economies outside the Middle East. UAE Minister of State for Foreign Trade, Thani Al Zeyoudi, stated during a visit to New Delhi for discussions with Indian Commerce Minister Piyush Goyal that both governments intend to initiate talks about an economic agreement aimed at enhancing business, investment, and jobs.
Goyal mentioned in a press conference on Wednesday, "Both sides have set a very ambitious and bold timeline, aiming to conclude negotiations by December 2021... We hope to sign formal agreements in early 2022." Given that the UAE hosts some of the world's largest sovereign wealth funds, it seeks to reposition itself as a global hub for business and finance amid increasing regional competition from Saudi Arabia.
Earlier in September, the UAE government announced plans to work on comprehensive economic agreements with countries that exhibit high growth potential, particularly in Asia and Africa. Last week, it reported plans to invest up to $14 billion in the UK. India aims to establish better trade relations to revive its economy following a deadly second wave of the pandemic since early 2021, already representing the second-largest trading partner for the UAE, with non-oil trade reaching about $40 billion before the pandemic outbreak.
The UAE asserts that bilateral trade could reach $100 billion in the five years following an agreement, and Goyal indicated that the trade volume could be adjusted upwards. The two countries plan to focus on sectors including textiles, jewelry, medical equipment, fintech, and petrochemicals. Indian citizens constitute one of the largest demographic groups in the oil-rich UAE, which is a major source of remittances. India is also an important market for UAE’s Emirates and Etihad airlines.
On the political front, members of the UAE royal family helped mediate talks between India and Pakistan earlier in 2021.
Investment flow between the two countries is already underway, focusing on food security. Groups from the UAE, a nation that heavily relies on imports, committed $7 billion in 2019 to create a "food corridor" and invest in Indian agriculture. Mubadala Investment Company (the sovereign wealth fund of the Abu Dhabi government) invested $1.2 billion in Indian telecom company Jio Platforms in June 2020, and Indian company Reliance recently announced a $2 billion investment in an industrial chemicals zone in Abu Dhabi.
Al Zeyoudi stated, "The UAE is rapidly moving to establish new strategic agreements to expand our market reach and leverage trade as a key pillar in a new era of economic cooperation. This will enhance our position as a global gateway to Africa, Asia, and Europe." As part of this approach, the UAE concluded talks with Indonesia earlier in 2021, pledging to invest up to $10 billion in sectors including energy, infrastructure, ports, tourism, and agriculture.
