 "Now, a special investment channel for the UAE")
The government has not made the time-period explicit over which this $75 billion will be spread. The amount is meant to be utilised in developing railways, ports, roads, airports and industrial corridors and parks across India. Over the past 15 years, the UAE has invested only $3 billion, accounting for a paltry 1.2 per cent of the country’s total foreign direct investment inflows of $249 billion.
“These are just feel-good numbers. Where is the capacity to absorb such numbers? We need to have a systematic change in terms of rules and regulatory measures to be able to attract such investments. Opening up special channels will serve no purpose unless we relax the rules for the investors of every country. These investments take place between companies and they will invest their money where they see easier norms. We need to address the specifics before we can expect such investments to come in,” said Neelam Deo, director of Gateway House, a Mumbai-based foreign policy think tank.
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Indian companies have turned out to be major investors in UAE with investments outflows from India to that country reaching $55 billion last fiscal. According to the Confederation of Indian Industry (CII), in order to correct this imbalance, investments from United Arab Emirates (UAE) can be facilitated by setting up special purpose vehicles in sectors such as semiconductors and renewable energy, apart from infrastructure development.
“Setting up of the infrastructure fund and other measures such as enhancing cooperation in the energy sector, SME (small and medium enterprise) development, education, space, defence manufacturing and nuclear energy, among others, will go a long way in correcting the investment imbalance that has crept into bilateral economic relations,” Chandrajit Banerjee, director-general, CII, told the Business Standard.
Officials pointed towards the easing of regulatory hurdles on investments coming from the UAE, which featured prominently during Modi’s meeting with Crown Prince of Abu Dhabi Sheikh Mohamed Bin Zayed AI Nahyan. Some of the big-ticket investments from the UAE have been subjected to massive scrutiny in the past. Recently, Abu Dhabi’s national carrier Etihad’s investment in India’s Jet Airways was subjected to a series of regulatory approvals.
According to the India-UAE joint statement, both sides will seek to increase their bilateral trade by 60 per cent by 2020.
The UAE is India’s third largest trade partner accounting for eight per cent of the country’s total trade volume. Two-way merchandise trade rose to $60 billion in 2014-15 from $43 billion in 2009-2010.
During his visit, PM Modi offered investment opportunities of $1 trillion into India by UAE. CII believes this can be tapped by setting up a petrochemical-refinery complex exclusively using Emirati crude. Both countries can explore a joint space exploration programme by way of partnership between India's successful mission to Mars and UAE's Al Amal project.