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UAE and India Trade Relationship

Info: 2972 words (12 pages) Essay
Published: 1st Jan 2015 in Economics

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In the global economy today, international businesses have taken a new dimension and progression in all forms. Bilateral trade, ties and other crucial development in the global market place today is as interesting to note and observe. One point to ponder over for a thought is the fact that globalization have brought in its baggage a bundle of benefits for global economy. But globalization also has thrown up new challenges for the global economy and international communities. Changing business environment in the backdrop of globalization and internationalization also a have brought about the emergence of new economy. The processes of economic liberalization also have opened up a window of opportunities and possibilities for trading nations. Such instance to the changing events is good for the global economy for many reasons thereof.

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Aim of the Study

In recent years since the advent of the new millennium, it is being observed that trade relationship between India and UAE has increased dramatically. The development in the regard is also interesting to note for many reasons thereof, given the fact that Indian and UAE economy today is the center of attraction for global economic analyst.

Hence the aim of this study is to take an interested approach to analyze India and UAE trade relation sin the last five years.

Objective of the study

As a developing economy, India has taken the global stage by storm. When we emphasized to the economic progression of UAE as well, there is every facts to cover up from an analysis that development is progressing in the right order.

Thus, such an eventual turn of events make for a point to ponder. And it should be clarified herein that the objective of this study is to reflect upon recent events and happenings encompassing UAE and India trade and its relationship at large, which we will discuss successively in parts, so as to drive home the idea of the subject matter.

Scope of the Study

Primarily, the scope of this study is based on observing the crucial face of international business in the world economy and its development today. We are of the opinion that there is no shortage of issue and subject to consider in that regard.

Hence, the subject interest that primarily focus on UAE-India trade relationship in the backdrop of international business and its processes overall. Add to it, the scope of this study and analysis also limits itself to these factors as a point to ponder and to drive home the idea overall.

Methodology of the study

The methodology initiated for the purpose of this assignment thus is simple enough and can be differentiated between primary and secondary data analysis to the subject matter. Data acquired in that capacity thus, is primarily based on theoretical analysis and assimilation of the subject matter and its discourse from available literature.

Secondarily, the methodology employed as a whole or in parts also is focused on data interpretation to recent news events and happening that is available in all forms of media, be it news reports, governmental circulations, economic news, forums etc, that specially relates to the subject encompassing UAE-India trade relationship in all its essence.

Limitation of the Study

In order to have a clearer understanding, it should be clarified again that this study and its analysis limits itself to the following question that arises:-

What defines UAE economy today?

What are the crucial elements and development phase of UAE import and exports with India?

Does UAE-India trade relationship posit a far reaching scope to enhance foreign trade and bilateral ties? If so, what are the possibilities in that regard?

Above all, what are the measures undertaken by UAE policy makers to boosts foreign trade with likeminded trading nations, especially India? Is there any firm level action from UAE part in that respect?

Considering these questions, we feel there is certain amount of limitation; however that does not deter the point to ponder with the study and to analyze these crucial facts despite certain hardship and drawbacks. Yet the limitation itself can be looked upon as a blessing in disguise.

UAE Economy in Context of Macro-Economic Indicator

In consideration of this subject and its analysis, it would be crucial and prudent to elucidate UAE economy in content of macro-economic indicators. J M Culburtson have asserted, “macro-economics theory in the theory of income, employment, price and money. P A Samuelson though is of the opinion that ‘macro-economics is the study of the behavior of economy as a whole. It examines the overall level of the nations output, employment, price and foreign trade.” (Dwivedi, 2005, p. 4)

From the basis of this definition in parts, it is clear what macro-economic is all about, which further assists in assimilating and interpreting UAE economic indicators considering the factors as defined. In that respect, data available with Arabian Business, a local news portals states that “despite the economic downturn that was witnessed globally in the early part of 2008, which directly and indirectly affected UAE economy also have showed a sign of recovery.” (Sambidge, 2009) In context of economic news and its indicators as can be interpreted, we feel that UAE economy today is in the right track. To top it all, business also have flourished, so is the economic activities that is gaining steam.

Hence, as far as UAE national output, price and foreign trade are concerned, we assume that recent development is positive, given the economic recovery that is in the right track currently. There is no denying the fact in that regard, although economic indicator available CIA Fact Book states that “as per 2009 estimates and its indicator, UAE economy have shown a slight downturn in its GDP, say nearly by 4%.” (CIAFACTBOOK, 2010)

As per data available with OPEC portal, “GDP per capita is estimated at $49,782, where as GDP at market price is estimated at $229.97 billion approximate.” (OPEC, 2010) What we can interpret from these indicator and figures is the fact that UAE today economy is progressing in the right track, especially the fact that “30 percent of the country GDP is directly related to oil and gas output.” (OPEC, 2010)

However, as per available information from governmental agencies of UAE, it shows that “labor and capital productivity saw a round about improvement in all aspects since 2004. Moreover, government budget in 2004 and 2005 also grew by a partial 15%, whereas trade balance was constant, although inflation shot up by 6.2% in 2005.” (Anonymous) These indicators although not latest present a clear picture of UAE economy and where it is heading.

UAE Export to India in the year 2000-2010

Shifting our analysis to the UAE export with India, we feel that in recent year’s bilateral relations between these two trading nations have taken a new course. Although it should be looked upon that major export trade partners of UAE are “Japan, India, South Korea, Thailand and Iran.” (UAE-Embassy, 2009) But what are interesting to note are the recent developments in context of UAE and India bilateral ties. News report available with the Financial Express states that, “UAE today is looked as a major export destination and tops India export market.” (Bhuyan, 2009) Moreover, “UAE export to India amounted to 10.7% which includes products such as pearls, precious stones, gold and other organic and inorganic chemicals.” (UAE-Embassy, 2009) In that respect, the following statistic limits its data analysis on UAE export to India only.

Hence, data available for the year starting 2001 to 2004 is interesting to note as far UAE export to India are concerned. For the year 2001 “UAE export to India amounted to $654.42 million, while for the year 2002 it was calculated at a value of $918.21 million. However, for the year 2003, UAE export amounted to $959.58 million. As far as 2004 export goes it grew dramatically, which was calculated at an amount of $2065.15 million.” (BusinessSupportCentre, 2009) Successively, for the year 2005 to 2010 UAE export data to India have grown dramatically. For the year of 2005 alone, UAE export was US$ 4641.10 millions. While that for the year 2006, it was estimated at around US$ 4354.08 millions.” (CGoI, 2007)

As we can analyse from the above there is a slight decrease when it concerns the year in between 2005 and 2006. Although, 2007 figures shows that UAE export to India was estimated at close to “US$18.2 billion in 2007″ (ThaindianNews1, 2008), which presents a dramatic increase. Above all, total direct export from UAE to India for the year 2008 alone was estimated at $1.28 billion.” (ThaindianNews, 2008)

Moreover, as far as 2009 and 2010 UAE export data with India goes, it was close to “US$ 303,696.31 for 2009 million, whereas for 2010 it was calculated at around US$ 288,403.31 million.” (DOC)

UAE Import from India in year 2000-2010

Comparing and contrasting the factor encompassing UAE imports there is a clear indication that India also ranks highly in that regard. Major trading partners of UAE in terms of its imports are “China which head the lists, followed by India, the US, Germany and Japan.” (UAE-Embassy, 2009)

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Thus, as per data available, UAE import data for the successive year 2001 to 2004 is interesting to analyze. Hence, for the “years staring 2001 UAE imports from India accounted to $2586.26 million. As for the year 2002 Imports was valued at $2500.28 million. For the year 2003, imports was valued at $3336.12 overall. Interestingly considering the year 2004, the value of UAE import from India was estimated at $5093.42” (BusinessSupportCentre, 2009) a drastic jump and increase. For the year 2005 though, “UAE import from India cleared the five landmarks that was calculated at US$7347.88 millions, where as for the year 2006, it was estimated at US$8591.79 millions that does not include petoleum and allied products.” (CGoI, 2007)

Specifically for the year 2007 alone, UAE import from India was a calculated at US$$114 billion” (ThaindianNews1, 2008) a significant increase.

However, as far as Imports for the year 2008 goes, “it is estimated at US$ 3.43 billion.” (ThaindianNews, 2008) This is a good indicator indeed from an economic point of view. For the successive year of 2009, UAE imports from “was estimated at 12% of the overall import, which includes products such as tea, cotton and other things.” (UAE-Embassy, 2009) Latest reports available with Economic Times reports, states that “exports by India to the UAE alone are calculated at 109.23billion Dirham or a direct 24.5% share of UAE direct imports from India for the year 2010.” (TheEconomicNews, 2010)

Scope for enhancing UAE foreign trade with India

There is every possible scope to enhance foreign trade between UAE and India. One aspect of it can be emphasized in perspective of bilateral ties and agreements which is crucial to foreign trade and its development.

Thus, we are of the opinion that in order to further strengthen trade activity between UAE and India, the scope for it at best can be reached through ties and agreements in all circumstances. Noting these facts, it is not surprising to relate that such development in the current state of affairs also have showed up.

As per with the news report available with Thaindian News, a web portal for news happening around the global relates that “recently in the last few months of 2010, UAE and India are working out on discussing bilateral trade and taking it a notch ahead by the leadership representative of both these countries, i.e., India and UAE. The good news in that regard is that leadership between these two nations also has come to a consensus and understanding to further strengthened the trade activity among them. There are every aspects that India envoys and leadership is serious enough to strengthened trade and other investment relationship with UAE” (ThaindianNews, India, UAE discuss bilateral trade, 2010) for all the sheer elements attached to it in context of global business and internationalization.

Hence, such development is important and pertinent to enhance the scope for future trade and commerce between India and UAE. And leadership factor and other peculiarities also is taking the right course with is not surprising, but delighted and pleasing to note the possibilities and road map worked out by UAE and Indian leadership and its development in the current state of affairs, which is befitting for both trading nations to enhances their economic co-operation and relationship.

UAE national policy measures to boost foreign trade with India

Reports for the year 2009 indicates that “UAE foreign trade have risen dramatically to 9%, which is on the basis of UAE foreign trade policy that is effective enough and wholly based on economic openness and liberalization, where there is abundant scope of opportunities for investors and trading partners,” (AmeInfo, 2010) and looked upon as one crucial facet on any given foreign policy to attract investment and bilateral ties and trade in context of international business.

Actually speaking, WTO review of UAE foreign trade policy also states that “policy of UAE mirrors a liberal economy that has greater scope and potential to enhance economic ties. Yet its performance also can be further improved with certain and specific structural reforms as and when it calls for by UAE leadership. In that capacity, the press release states that abolition of Restrictive Trade Agency laws and the inclusion and adopting competition legislation and other aspects of furthering liberalization process can have a long way to drive UAE economic activity in the process that is befitting.” (WTO, 2006)

Hence, taking these points in consideration, we are of the opinion that UAE national policy measure to boost foreign trade with India also should follows the same course. As far as Restrictive Trade Agency laws is concerned doing away with it or reforming it can comes in handy for UAE to boosts trade with India.

UAE Firm level actions

Given the current development, UAE firm level action in context of national policy measure can be emphasized to the economic reforms that have taken place in recent times, which directly links it to the fact in booting trade with India.

Take for instance The Economic Times reports in which it is highlighted that “UAE formulated polices of free economic zones for service sector, especially form Indian companies is one basis of boosting trade with India, and the results in that regard also shows directly in terms of annual growth that is estimated at 33%. (TheEconomicTimes, 2010)

Thus, we can ponder and reflect that in what ever circumstances, liberalization process of UAE policy is as effective as it mandate. The firm level action from the part of policy makers also can be looked within the events reforms encompassing free trade zone that is specific to India in the current state of affairs.


We can conclude to the fact that bilateral trade and agreements between India and UAE have showed a positive development in all forms. The recent interest by policy makers of both nations to further supplement trade ties and its relation is also important to note in context of international business.

Furthermore, the point to ponder also si that without any bilateral ties and agreement, facilitating trade and commerce presents a mockery of itself. Hence, the measure undertaken by both nations in terms of policy that is effective to one another have had a close share to boost economic relationship between India and UAE in the current state of affairs.

Thus, what we can finally conclude at this point is the fact that such development is good for the global economy, as well as the national economy of both trading nations.

Findings and Recommendation

As far as UAE economic progression is concerned today, many crucial phase of its international business links have been more than befitting for the economy and the nation as a whole. As a result of ties and agreements with trading countries, say India, Japan, US, Iran and China, etc have provided UAE with a connecting channels to fosters international business and its development in a meaningful ways. Add to it, as a result of the hyperactive developments and initiated policies by policy makers in UAE in areas concerning foreign trade have been effective enough to attract FDI, increased export and imports, which directly have a positive bearing on the economy of UAE, and that which also bridged a way to improved relationship as a result of international business and its development in UAE.

As a result of growing economic relations between UAE and India, it is further recommended that policy makers can further undertake many unitary measures to boost trade. Let say signing agreement specific to service sectors, education, FMGC, ownership norms for Indian entrepreneur and IT majors with a willingness to set up Affiliate Company in the UAE.

Focusing on these areas can dramatically have benefitting economic, social, political and cultural recourse for both nations directly and indirectly.


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