UAE-INDIA Trade – How To Remove Roadblocks With The Right Management Tools

• Recent market routs was short-term and stock indices in UAE and India have recovered

• A thorough and holistic approach to ensure a positive ROI on corporate trade is necessary

• Despite the devaluation of the Indian Rupee, UAE-India trade remains strong amid ample demand across various sectors

By HRV Global LifeSciences CEO Hari Kiran Chereddi

The recent market rout which saw stock indices plummeting across all continents on Monday August 5th has not affected the continuous upward trends and plans on in both the United Arab Emirates (UAE) and India to lift trade between the two sides to the next level, an internal HRV Global Life Sciences survey clients and stakeholders. 

The UAE signed in 2022 a Comprehensive Economic Partnership Agreement (CEPA) with India. In 2023 bilateral exchange reached US$84.5 billion in the financial year ending March 2023, compared with US$72.9 billion in the year to March 2022 (according to Indian government statistics). Abu Dhabi and New Delhi aim for US$100 billion+ in the coming years. Dubai’s Jebel Ali Free port reported earlier in March that in 2023 it has attracted 190 firms from India, lifting the number of Indian corporations to 1,500.

When engaging in trade and investments between UAE, Dubai in particular, and India, several key factors are crucial:

1. Regulatory Compliance:
   • Dubai: Understand the rules and regulations set by the Dubai Department of Economic Development (DED), Dubai Free Zones, and other relevant authorities. Dubai offers various free zones with specific benefits for foreign investors.
   • India: Familiarise yourself with the Foreign Exchange Management Act (FEMA), the Foreign Direct Investment (FDI) policies, and the regulations set by the Reserve Bank of India (RBI) and other relevant authorities.
2. Taxation:
   • Dubai: Dubai has favorable tax conditions, including no corporate tax for most businesses and no personal income tax. However, VAT is applicable at 5%.
   • India: India has a complex tax system with corporate tax rates, Goods and Services Tax (GST), and various other levies. It’s important to understand the tax treaties between India and the UAE to avoid double taxation.
3. Cultural and Business Practices:
   • Dubai: Business in Dubai often involves personal relationships and a formal approach. Understanding local customs and practices is crucial for successful negotiations and partnerships.
   • India: Indian business culture may include extended negotiations and a focus on long-term relationships. Building trust and understanding local customs can facilitate smoother business transactions.
4. Legal Framework:
   • Ensure all contracts and agreements comply with local laws in both jurisdictions. It may be beneficial to consult legal experts familiar with cross-border trade between Dubai and India.
5. Market Research:
   • Conduct thorough market research to understand the demand for your products or services in both markets. This includes understanding consumer preferences, competitive landscape, and economic conditions.
6. Logistics and Supply Chain:
   • Dubai is a major logistics hub with advanced infrastructure, while India has a vast and diverse logistics network. Plan your supply chain efficiently to optimise costs and ensure timely delivery.
7. Financial Considerations:
   • Consider currency exchange rates, transfer fees, and financial regulations. The UAE dirham (AED) and Indian rupee (INR) will be the currencies involved, so understanding currency risk and hedging options is important.
8. Investment Opportunities:
   • Dubai offers opportunities in real estate, tourism, and technology, while India has growth potential in sectors like technology, manufacturing, and infrastructure. Identify areas of mutual benefit and high growth potential.
9. Political and Economic Stability:
   • Stay informed about the political and economic conditions in both regions, as these can impact trade policies, investment climate, and business operations.
10. Networking and Partnerships:
    • Build strong networks with local business chambers, trade associations, and potential partners in both Dubai and India. This can provide valuable insights and open doors to new opportunities.

Navigating these factors carefully will help ensure successful trade and investment ventures between the UAE and India. 

Photo credit: Julius Silver (Pexels.com)