For centuries seafaring Indian and Arab traders have been plying the waters of the Arabian Sea building and strengthening commercial ties that have successfully overcome challenges and withstood the test of time.
Geographic proximity, historical trade links, cultural affinity and the ability to complement the trade and economic demands of each other are vital pivots around which relations between India and the GCC states revolve. In recent decades, India’s booming economy with its growing exports and burgeoning energy needs, and GCC countries, which import near most everything and are looking to market their large hydrocarbon stocks, have found common ground in mutual trade. Today, the GCC is India’s largest trading partner with $137.7 billion trade in 2014-15, up from around $17 billion in 2005 and more than half of India’s oil and gas imports now come from the GCC states.
In a recent ministerial level meeting between foreign ministers of India and the GCC states, Indian Foreign Minister Sushma Swaraj called for the early finalization of the India-GCC Free Trade Agreement and the operationalizing of the India-GCC Framework Agreement. She also urged her GCC counterparts to transform the buyer-seller relationship in the energy sector into a “mutually beneficial investment partnership.”
In August 2015, during his historic visit to the UAE, Indian Prime Minister Narendra Modi sought to further strengthen relationship with the GCC country and promote greater investment in India’s economy. During the visit the two sides established the UAE-India Infrastructure Investment Fund, with a target of $75 billion, to support investment in India’s planned expansion of next generation infrastructure, especially in railways, ports, roads, airports and industrial corridors and parks.
The UAE is India’s third largest trading partner, behind the United States and China, and the two countries are looking to boost this bilateral trade from its current level of around $60 billion to $100 billion in the next few years. This is entirely feasible given that India has one of the largest economies in the world and in the current economic climate is one of the best bets. Inflation in India has been tamed and Indian GDP growth is humming along at a healthy 7 percent a year, making it the world’s fastest growing major economy.
Moreover, Dubai International Financial Centre (DIFC), the UAE’s onshore financial center that provides a platform for international business and financial institutions to access emerging markets in the region, has an explicit target to increase its registered Indian firms to more than 100 in the next 10 years. During the recent visit to India by the Crown Prince of Abu Dhabi, Sheikh Mohammed bin Zayed Al Nahyan, efforts to make UAE the largest trading partner of India gained steam.
The high-profile UAE delegation that accompanied the Crown Prince during his visit included ministers, senior officials and business people keen to engage with their Indian counterparts. The UAE is making strong inroads in its diversification program, including in renewable energy, technology, aviation and infrastructure, all areas in which India is seen as being able to play a significant role. The two countries have also announced their intention to cooperate in producing military equipment, space technology and nuclear energy.
As India and the GCC states strive to open up their markets, boost trade and enhance their economies, the dynamics of their relationship has grown beyond energy security and traditional trade to encompass the large Indian diaspora who live and work in the region. Today, the Indian diaspora of nearly seven million in the GCC states account for 38 percent of the total expatriate population in the region, constituting the largest expatriate community in the region, as well as individually in each state.
Over the years, the Indian diaspora have contributed considerably to the growth and development of the six-nation bloc. Also, the money remitted back by the diaspora to India, which constituted over half of the $70 billion that flowed to India as remittances in 2014, have gone a long way to beef up the country’s foreign exchange reserves.
For decades, Indian entrepreneurs have been levering the cordial business and social relationships built over centuries and taking advantage of opportunities in the emerging Gulf to create successful businesses in every sector of the economy. Under the new plans being envisaged between the two countries this people to people link is all set to grow stronger in the future.