UAE’s trade with India to hit $100 billion mark well ahead of 2030 target

25 September 2024 Consultancy-me.com

The bilateral trade between the United Arab Emirates (UAE) and India is expected to exceed the ambitious $100 billion target well ahead of the 2030 deadline, according to a study from Primus Partners.

Trade between the two nations has seen significant growth, reaching $85 billion in the fiscal year 2022/23, marking a 13% increase from the previous year. This growth highlights the UAE’s strategic role as India’s third-largest trading partner and second-largest export market.

The UAE’s imports from India span a wide range of sectors, including precious metals, stones, gems, jewellery, minerals, and refined petroleum products. Additionally, food items such as cereals, sugar, fruits, vegetables, tea, meat, and seafood, alongside textiles like garments, apparel, synthetic fibres, cotton, and yarn, contribute significantly to bilateral trade.

Technology solutions and services, machinery products, and chemicals are also key exports from India to the UAE.

India's trade with the UAE to surpass $100 billion goal well ahead of 2030 target

Source: Primus Partners

Commenting on the developments, Nader Haffar, Director at Primus Partners in the Middle East, stated: “The India-UAE economic relationship has evolved into a multifaceted partnership that is reshaping the future of regional and global trade. This highlights how both countries are not just increasing trade volumes but are aligning their strategic goals in key areas like digital innovation, energy sustainability, and infrastructure.”

The impact of CEPA

The growth in trade underscores the strengthening economic ties between the UAE and India, particularly following the visit of Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, to India. During his visit, he held discussions with Indian Prime Minister Narendra Modi, which culminated in the signing of five large collaboration agreements.

These agreements have further enhanced the partnership, which has been supported by important structural reforms, particularly the Comprehensive Economic Partnership Agreement (CEPA) implemented in 2022.

The CEPA has been a game-changer in the UAE-India economic relationship. By eliminating many long-standing trade barriers, it has allowed smoother trade flows and encouraged collaboration across diverse sectors. Traditional industries such as oil & gas, gems and jewellery, and information technology have benefited significantly from the agreement. Additionally, new sectors like green energy, food security, and advanced technology have started to gain traction in the bilateral trade portfolio.

Nilaya Varma, CEO and Co-founder of Primus Partners, commented: “India-UAE trade relations are entering a new era, driven by structural reforms like CEPA that have dismantled long-standing barriers. The partnership is now more strategic and forward-looking, setting the stage for both nations to leverage their complementary strengths and create an integrated trade ecosystem that will be critical in navigating the shifting dynamics of global commerce.”

India's trade with the UAE to surpass $100 billion goal well ahead of 2030 target

Source: Primus Partners

The India-Middle East-Europe Economic Corridor

One of the major factors driving the deepening UAE-India economic partnership is the India-Middle East-Europe Economic Corridor (IMEEC). This ambitious project is aimed at enhancing regional connectivity by creating an integrated network of transportation and communication infrastructure. The corridor will include railway lines, sea routes, road networks, electricity grids, optical fibre cables, and hydrogen gas pipelines, all designed to streamline trade and supply chains.

The IMEEC has the potential to revolutionize regional development and trade by offering seamless connections between continents. This infrastructure network is expected to attract increased foreign investment, create new employment opportunities, and enhance the UAE’s global presence. The corridor is also positioned as a strategic alternative to China’s Belt and Road Initiative (BRI), highlighting the UAE and India’s role as key players in shaping future trade routes.

Furthering bilateral trade

In its report, Primus Partners makes five recommendations which it believes could further strengthen ties and accelerate the flow of economic value.

The first recommendation is the implementation of a master dashboard to oversee critical infrastructure projects, particularly those under the IMEEC framework. This would allow for better monitoring and management of key initiatives. The second recommendation centers on commerce, advocating for the establishment of a bilateral e-commerce marketplace for goods and services within the CEPA framework.

The report also highlights the importance of promoting sustainable environmental practices, including improved water management systems. Enhancing people-to-people exchanges through cultural and educational collaborations is another area of focus. Additionally, the creation of a unified tourism booking platform, targeting luxury, religious, and business travel, is suggested to further boost the ties between the two nations.

India's trade with the UAE to surpass $100 billion goal well ahead of 2030 target

Source: Primus Partners

Finally, Primus Partners recommends the establishment of an online digital repository to showcase investable projects in strategic sectors. This repository would serve as a valuable tool for decision-makers in both the UAE and India, facilitating targeted investments and encouraging economic growth in both nations.

Haffar concluded: “The synergy between two of the world’s fastest-growing economies is creating new opportunities, fostering innovation, and building a foundation for long-term prosperity that could serve as a global model for emerging market partnerships. Managing these partnerships will create a stronger and more diverse bilateral relationship, one that is less dependent on traditional sectors and more oriented toward future development.”

The importance of UAE-India relations

The UAE and India share a deep-rooted economic and historical relationship, one that has grown even stronger in recent years. In February, Indian Prime Minister Modi visited the UAE for the seventh time since taking office, underscoring the significance of the ties between the two nations.