A larger economic footprint for India in the Gulf and stronger trade will be on Prime Minister Narendra Modi's mind as he embarks on a 4-day tour of Palestine, the United Arab Emirates and Oman beginning Saturday.
This will be his fifth visit to the Gulf and the West Asian region since 2015 in what has undoubtedly been a key geography for the current government with regards to investments and a growing export destination.
Historic trip to Palestine
The most talked about leg of the Prime Minister's trip is to a nation r where India doesn't even keep official trade and investment statistics. Modi will kick off his visit on by first reaching Ramallah, the administrative centre and de facto capital of the Palestinian territories after transiting through Jordan.
Pundits continue to debate the implications of the first visit by an Indian Prime Minister to Palestine a month after Israeli Prime Benjamin Netanyahu came to India amidst shows of incessant bonhomie between the two leaders. However, sources said, he will also be talking to Palestinian business leaders while both governments may commit to greater skill training and tech support by India, especially in the medical and educational sectors.
Big business in the Emirates
In his second state visit to the United Arab Emirates (UAE) since August 2015, Modi would be addressing the Sixth World Government Summit at Dubai. On the sidelines, he is expected to explore the possibility of greater trade and investments with industry leaders in India's second-largest export destination and largest overseas investment market.
India is also the third-largest investor in the country with Indian firms like L&T, Punj Lloyd, Hinduja Group and the Oberoi Group of Hotels having bagged projects there, according to the UAE government. Following the emergence of UAE as a major re-export centre, Indian companies have emerged as important investors in the free trade zones such as Jebel Ali FTZ, Sharjah Airport and Abu Dhabi Industrial City.
The UAE is the 10th largest foreign direct investment (FDI) source market for India with cumulative FDI reaching $27.76 billion in the last 17 years from April 2000 till September 2017. However, official statistics show that FDI has flowed down over the last 2 years, in contrast to other nations.
Last October, UAE investors announced nearly $2.5 billion worth of investments in India, including a $1 billion investment by Abu Dhabi Investment Authority (ADIA), one of the largest sovereign wealth funds in the world and $1 billion by NRI-Emirati Investor’s Group, a consortium of UAE-based private investors, among others. ADIA is also a stakeholder in the National Investment and Infrastructure Fund (NIIF) and has created a task force with the Commerce Ministry to facilitate more than $ 1 billion into varied sectors into India, UAE ambassador Ahmed Al Banna said.
Recently, retail giants from the region such as Panda have ventured into the processed food segment in India to source produce for their home markets.
However, some prickly issues may need to be discussed as well. More than 2.8 million Indian expatriates currently live and work in the UAE, comprising nearly 30 per cent of the national population and the Emirates’ largest expatriate group. But experts predict that in nations across the Gulf Cooperation Council (GCC), fiscal tightening, fluctuating oil prices and policies discouraging recruitment of foreign workers will dampen remittance flows to India, which received over $ 65 billion through this route in 2017.
With news from the Sheikhdoms warning of more crackdowns on the unregulated hiring of foreign workers, the worlds largest recipient of remittances from its diaspora in 2017, will be affected, according to the World Bank.
Strategic ally Oman may ensure India's reach into East Africa
India's oldest strategic ally in the region, Oman, will be the PMs last stop. Currently, there are more than 3000 joint ventures between Indian and Omani partners with a total investment of around $7.5 billion, according to official statistics.
India is also a major destination for Omani tourists and medical patients. India has shown interest in the Duqm free port complex being developed by the Omani Sultanate as a springboard for accessing the growing markets of nearby East Africa where China has recently made headway, according to Omani diplomatic sources.
However, senior Commerce Department officials said talks on the proposed India-Gulf Cooperation Council are not expected to see a boost during the visit. The deal would be one of the largest y volume of trade as more than 50 per cent of India’s oil and gas come from the GCC countries. The agreement was proposed back in 2007 when a basic framework was signed but interest has waned off from the GCC side, an official said.