India is emerging as one of the key contributors to the flourishing foreign investment activity in the Northern Emirates.
With nearly 1.1bn people in 2006, India, the second-most populous country in the world, boasts the third-largest economy when measured at purchasing power parity exchange rates. Approximately 10,000 Indian firms are currently operating throughout the United Arab Emirates (UAE) and Indian investors and entrepreneurs are finding the emirates to be a lucrative destination for business and investment.
In August, India's newly appointed ambassador to the UAE, Talmiz Ahmad, said boosting bilateral and economic ties between the emirates and India is one of his key objectives.
"My major task is to further enhance the political and economic relations with India and the GCC [Gulf Co-operation Council] countries, especially the UAE. My objective is to create more small and medium-scale joint ventures between the two countries. This will help boost bilateral economic ties."
In Sharjah, the Hamriyah Free Zone (HFZ) authority has recently invited Indian investors and entrepreneurs to set up business operations in the zone for exporting their products and services to global markets. "During the last six to seven years, about 500 Indian firms in diverse verticals have discovered the HFZ as an ideal place to expand their overseas operations," said HFZ Director-General Rashid Al Leem at a recent trade seminar.
In addition to an international airport that connects to 230 cities, Sharjah is the only emirate with ports on both Gulf coasts with direct access to the Indian Ocean. The free zone is home to 2000 firms from 110 countries.
Ras al-Khaimah (RAK) has been particularly active in building ties with India. In conjunction with India's 60th anniversary of independence celebrated in August, the RAK Investment Authority (RAKIA) hosted a launching ceremony for the newly established India International Club RAK (IIC RAK) on August 17. The IIC was introduced to promote bilateral co-operation, underlining the potential for a long-term future between the two. RAKIA operates one free zone with a total area of 2.2m sq metres and two industrial zones, with around 28m sq metres.
In April, RAKIA signed a Memorandum of Understanding (MoU) with the Indian state of Tamil Nadu for its overseas investments. Following the agreement, RAKIA joined forces with Tidco, a state-owned Indian company, to invest $4.9bn in the state. The agreement consists of two projects in the Coimbatore and Kadalur regions of Tamil Nadu.
The mixed-use 1000-acre Coimbatore project, anticipated to be completed in five years, is expected to have an information technology special economic zone of about 5m sq ft and is expected to generate employment for over 50,000 people. Developers have planned to include a golf course, shopping malls, a resort, a wellness spa and multi-family homes matching international standards.
The 500-acre Kadalur Marina project will have water sports, leisure, entertainment, high-end residential and a world class golf course. The project would employ over 15,000 people.
In a separate venture, the fast-growing RAK Free Trade Zone (RAK FTZ) earlier this year signed a MoU with the Kerala Chamber of Commerce and Industry. The chamber actively promotes the free zone's various investment schemes and liaises with the government of Kerala and other business groups to set up business ventures. The total number of companies registered in the free zone crossed 3450 in June, of which approximately 30% were Indian companies.
UAE-based Jaleel Traders recently announced plans to partner with Kerala-based Eastern Group, to set up a state-of-the-art spice and pulse processing facility in RAK. The joint venture, Eastern Middle East, will operate in a 1000 sq meter plant. The two companies will equally share the $7.3m investment. The joint venture is expected to provide a better reach for Eastern products across the Middle East. The targeted turnover for 2011 is Dh1bn ($270m).
"The new company will come up in the next few months and will focus mainly on importing pulses, rice, dry fruits, nuts, herbal dry leaves and spices from around 42 countries," said Sameer K Mohammed, managing director of Jaleel Traders.
"We decided to set up the firm in UAE as currently there are import restrictions for various items into India, and since Dubai is a free port there would be no such problems," said Eastern Group chairman, M E Meeran.
While labour costs in India are lower than they are in the Northern Emirates, Indian companies and investors are being lured in increasing numbers to the Northern Emirates as it is beginning to develop many attractive features, such as an advanced high-tech infrastructure and a large talent pool, including educated Southeast Asian and Arab-speaking expatriates. Labour costs in the Northern Emirates average Dh15,000 ($4000) per year, up from Dh 3000 in 2000, Al Wahda Group General Manager Salah Al Agha told OBG.