Boosting trade with Gulf
Excerpts from the speech of Mr. Ajay Sahai, DG, FIEO on the topic "International Trading, Joint Ventures and Investment" at 35th World Marketing Congress held on 21st January 2008 at New Delhi
INDIA shares a special relationship with the Arab region, both in terms of culture and trade. Arab countries, with a combined GDP of US$ 1450 billion and a GDP growth of 20%, offer ample bilateral opportunities for India. Many business gurus believe India’s trade with this region is going to be more favorable than with the Western world. After all, it is a resource rich region and is geographically close to us.
We have witnessed rapid engagement of Arab nations with the Indian economy and trade. There are great complemen-tarities between our economies since Arab nations are important sources of our energy and growing destinations for our investments and expanding markets for our goods. Moreover, approximately 5 million Indians live in Arab nations and are fully engaged in their economies and societies.
Friends, we are all aware that international trade is an extremely competitive and dynamic arena. It is impossible to thrive and succeed in this market by compromising on quality. The region has high purchasing power. Therefore, it is essential that Indian businessmen, particularly the SMEs, paid proper attention to the quality factor.
The Indo-Arab business cooperation has huge scope for growth through newer joint ventures, collaborations and diversification of the trade basket. The conditions are ideal as India is now a trillion dollar economy and has emerged as the one the world’s fastest growing wealth creators.
Opportunities for cooperation between India and Arab countries exist in the areas of information technology, bio-technology and medical tourism. Further, India and the Arab nations have potential to cooperate in nanotechnology, besides space and genome research, for mutual benefits. The two sides may also enhance cooperation in areas such as services, industrial modernization, research, technological development, maritime transport and air services.
Boosting trade definitely needs assistance from the government. The Indian Government attaches a high priority to its multi-faceted relations with the Arab nations. The much talked about Free Trade Agreement (FTA) with the Gulf countries is certainly going to be an icing on the cake. India’s total trade with GCC countries, comprising Bahrain, Kuwait, Oman, Saudi Arabia, Qatar and UAE, witnessed a fourfold increase in the last five years. The trade volume shot up to $ 22.5 billion in the fiscal year ending March 2007 from $ 5.6 billion in 2001. I am hopeful that this would open opportunities for Indian companies to enter other Arab countries.
If we look at the trade, UAE holds special significance for us. UAE is India’s top trading partner in the whole of West Asia and North African region, representing nearly 75% of India’s exports to the Gulf Cooperation Council (GCC) countries. Indian exports to the UAE account for approximately 6% of its global exports. UAE is becoming Gulf Region’s major transhipment hub because of its excellent port facilities, pro-business climate and central location amidst Europe, Asia and Africa. UAE’s infrastructure is excellent - the roads, banking facilities and telecommunications are all top class.
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8th FIEO-IIFT Short Term Refresher Programm |
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FIEO (Northern Region) in association with IIFT, New Delhi is organizing the 8th Short Term Refresher Programme on International Trade as per the details placed below:
The Programme will cover: · Review of National Foreign Trade Policy; · Overview of Customs & Excise Rules/Regulations covering Export-Import Transactions; · Framework of International Trade Documents · Export Incentives including Duty Drawback Scheme · Understanding the Implications of WTO · Market Entry Strategies – Finding of Importers · Use of Internet for Exporters – Finding Buyers, Sourcing, Business Intelligence, Networking, Online Auctions, etc. · Export Finance Schemes – Facilities to Gold Card Holder – Cost Reduction Approach · Introduction to ECGC Policies, Guarantees & Claims for Export Payments · Understanding Schemes of Managing Currency Risk in Export Transaction, Hedging, Understanding of new UCP 600.
Specialists from IIFT, trade-related Ministries and FIEO will constitute the faculty and a Certificate will be given on completion of the Programme.
For more details and participation, please contact,
FIEO (Northern Region) at 011-46042118, 46042121, 46042172. Limited seats on first-cum-first served basis |
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The Arab region is undoubtedly an oil rich region. Approximately fifty per cent of India’s oil resources are derived from Gulf countries. But the time has come to look these markets beyond oil. One area, in which India could provide some partnership to the West Asia, is Water Treatment Plants. The region is short on water but it could create a green environment by the way of drip irrigation. The other area could be Project Exports, because the West Asia is in the process of rebuilding itself.
The value of trade in agriculture and processed food between India and the Gulf has grown over the past and India is looking to expand its trade in agro products further with this region. On the other hand, less than 1% of all UAE investments were in India, but the country is keen to focus on investing in India’s economy including agriculture sector and so the possibility of setting up laboratories in India for quality testing of food exports to meet the standards set by UAE authorities should be explored.
If we look at other Arab countries, the opportunities are immense. The present level of economic engagement between India and Oman is far below the potential. Opportunities for increasing bilateral trade and economic cooperation exist in various traditional and new areas such as petroleum, oil and energy, gas and fertilizers, information technology, higher education, civil aviation, agriculture etc. Tourism is also a promising area. Labour, employment and manpower cooperation are also priority areas for bilateral cooperation.
If we talk of our economic engagement with Saudi Arabia, then we ought to know that the investments have been largely unilateral and most investments have come from India. India is now the fourth largest investor in the Kingdom, ahead of Japan. Indian investment is booming from $250 million three years ago to $1.2 billion now. On the other hand, there has been a 28.17 percent increase in the two-way non-oil trade between India and Saudi Arabia.
Indian companies have established more than 157 joint ventures between 2000 and 2006 in Saudi Arabia. These are in sectors such as management and consultancy services, construction, telecommunications, information technology and pharmaceuticals. There are also flourishing collaborations between companies in design, consultancy, financial services and software development. Major opportunities for Indian companies exist in almost all sectors of Saudi economy, including higher and technical education. Indian IT companies are already involved with a growing number of Saudi companies that are outsourcing their IT requirements. These Indian firms have supplied high-quality products and skills at a fraction of the cost of international competition.
Meanwhile, there are some 49 Indo-Saudi joint ventures in India covering paper production, chemicals, computer software, granite processing, industrial products, machinery, cement and metal industries. New joint ventures are coming up in hotel, telecommunication and heavy engineering industries. In addition, Saudi investment is being made in fuel and lubricant distribution for ship bunkering and aircraft refueling.
Similarly, our trade with Bahrain grew by 71% in 2006-07. With Egypt it grew by 180% and with Kuwait by 577% in the same year. So each and every Arab country holds special significance in one way or the other. Friends, I would only like to say that the opportunities are immense and the time is right. The only requirement is that we have to gear up ourselves to have a mutual beneficial equation with businessmen of this important region to boost our trade ties.
