There was an air of optimism among the delegates from 22 Arab states and India and the cross-section of ministers, officials and business leaders of Arab states when they met with their Indian counterparts during the just-concluded Arab-India Partnership Conference 2012: Development through Trade & Investment in Abu Dhabi. The tectonic power shifts in the wake of the protests in certain sections of the Arab world notwithstanding, the Indian and Arab desire to diversify and deepen their links was evident in the 700-strong delegate presence at the Abu Dhabi Summit.
There appears to be an acute realisation in the Arab world that India is a power to reckon with on the economic stage and that doing business with New Delhi can be very rewarding as borne out by the Abu Dhabi Declaration that has commended the role of Indian businesses in the economic development of several Arab states. Arab states want to see this role expand further.
The declaration also affirmed that the next India-Arab conference would be held in 2014 in New Delhi. This promises larger participation of investment agencies and the private sector.
The Arab-India Partnership Conference, 2012, had a special import this year because of the on-going fragility of the global economy. The need for global dependence and cooperation had never been so important. The conference reinforced the immense scope for closer ties and cross-border partnerships that India and the Arab region hold. The key economic strengths and opportunities in India, despite the slowdown, shores up optimism that this scope can be further nurtured.
Of India’s total international trade, Arab countries account for over 20 per cent. Within the Arab world, India’s trade with the the Gulf Cooperation Council, or GCC, nations rose to $118.90 billion in 2010-11, and within the GCC, the trade with the UAE increased to $67 billion in the same period, making it India’s largest trading partner after China and the US.
That this relationship no longer revolves around Arab oil and gas to the exclusion of other issues and includes a genuine desire to carry cooperation across multiple sectors marked by cross-investments from both sides was evident in the two days of presentations, debates and discussions from May 22-23. The discussions involved 40 speakers including 13 from India cutting across diverse disciplines and specialisations — which covered small and medium enterprises, high education and skill development, science and technology, infrastructure, agriculture and food security. There was a special plenary session on banking, finance and investment with special focus on Invest India. There were also 300 B2Bs facilitating interactions between businesses from India and the Arab world.
Indeed, investment proposals have flowed in from six states like Odisha and Karnataka. The presence of Arab investment agencies like Abu Dhabi Investment Development Authority, Investment Development Authority of Lebanon, Economic Development Board of Bahrain, and investment agencies from countries like Djibouti Egypt and Mauritania is a sign of the growing importance of this conference for investors and holds out promise of greater flow of investments both ways.
A propitious climate for a surge in trade and investment now looks set to boost the prospects of trade and investment. Investments by the GCC countries in India have increased sharply in the last couple of years and are now an estimated $125 billion. Of this, a cumulative investment of $112 billion has gone into infrastructure while special economic zones accounted for $12 billion, agriculture and food processing for $900 million, real estate for $700 million and oil and gas for $500 million. Moreover, India is expected to be the world’s third-largest consumer of oil in 2030 and its reliance on the Gulf is bound to increase sharply. The six members of the GCC control over 45 per cent of the world’s recoverable oil wealth and 20 per cent of gas resources. They supply about one-fifth of the global crude output.
The capital-rich Gulf region can also be a substantial source of investment in developing infrastructure in India for which this country has estimated a requirement of $1 trillion over the next decade. With India opening its doors to public-private partnerships, there is a big window of opportunity for investors from the Gulf.
Most of the six-million expatriate Indians in the Arab countries are in the Gulf countries. Together they remit annually close to $20-$30 billion — almost half of the $60 billion in total yearly remittances by Indian workers abroad. This is an important fillip for Indo-GCC economic links.
For the Arab world, there is much to be gained from India’s proven capabilities in information technology, biotechnology, pharmaceuticals, health and environmental protection and conservation. India’s role in developing scientific and technological capabilities, especially in the knowledge-based industries, can also be duly harnessed. Investors from India have already identified several of these sectors for investment.
As the Indo-Arab juggernaut moves on, there is much that can be achieved in mutuality of interests. The Arab-India partnership is a win-win situation that both sides need to leverage.
The author is Deputy Secretary General & Head-International, Ficci