According to a report by the Kuwait-based Global Investment House (Global) Gulf Cooperation Council (GCC) investors have started focusing on India as an investment destination. Strong economic growth on the back of services sector contribution has helped sustainable economic growth of 8 percent during the last three years. Government's thrust toward infrastructure development via public-private partnerships is likely to bolster further investments.

Buoyancy in manufacturing and services sector activities coupled with booming stock markets provide an opportunity for foreign capital to flow in India.

The Global report said FDI in India is increased from $5.55 billion in 2005 to $7.23 billion at the end of November 2006, an increase of 30.3 percent. Mauritius and US are the biggest investors in India, accounting for 40.8 percent and 13.8 percent respectively of the total FDI in India.

The GCC countries have invested around $406.3 million constituting around 1 percent of total FDI received by India. Among the GCC countries, UAE is the largest investor in India, accounting for around 79.0 percent ($321.1 million) of the total investment made by the GCC countries, followed by Bahrain ($32.7 million), Oman ($24.51 million), Saudi Arabia ($19.18 million), Kuwait ($8.87 million) and Qatar ($0.09 million).

Trade between India and GCC countries is also flourishing. India-GCC trade stood at $19.48 billion in 2005-06, without taking into account the oil trade. The two-way trade between India and GCC is likely to exceed $24 billion in 2007. The trade balance between the UAE and India during the fiscal year 2005-06 amounted to $13 billion and is expected to grow by 30 percent in the current fiscal year 2006-07. Moreover, companies in UAE like Emaar Properties and Nakheel have already invested in major Indian infrastructure projects like special economic zones and real estate. Following their footsteps, more companies are likely to participate in big infrastructure projects in India.

Custodian of the Two Holy Mosques King Abdullah's visit to India last year is also expected to boost bilateral economic relations between the two countries. The two countries have signed various agreements to promote trade and investment during King Abdullah's visit.

Recently, Kuwait's Emir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah undertook the historic visit to the Asian countries aimed at promoting trade, investment, scientific and technical ties with the growing emerging market economies. Kuwait, as part of its reforms program, is looking for increased cooperation with foreign companies in energy sector, particularly in Asia which is a huge market for such products.

The Global report said Kuwait and India signed various agreements which included agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, which will enhance economic relations between the two nations. India is the second largest importer of Kuwait's oil with an annual average worth about $2.5 billion. The report said liberalization and upcoming infrastructure projects in the Asian countries present a huge opportunity for Kuwait companies to make investments.

GCC and India are in the midst of signing a free trade agreement (FTA), which will further strengthen the relationship between them. The agreement is likely to be signed in the near future and is expected to augur well for two-way trade, investment and commercial activities.

The surplus liquidity in GCC provides sufficient scope for further investments in the real estate sector which is estimated to be around $80 billion in India. According to the recent reports, India is expecting around $2 billion of investment from the GCC countries in the next three years.

The Global report said there are several key areas such as ports, power, tourism, roads, gems and jewelry and textiles which are important for Indo-GCC cooperation.

Among the major projects in India, Emaar Properties formed a joint venture with MGF Development Limited of India. The venture has over half a billion dollars of projects in the pipeline with a total investment of $4 billion. Similarly, Nakheel, a leading Middle East real estate developer, has formed a 50:50 joint venture with Delhi-based firm Parsvnath Developers.

The two companies will set up a new entity to develop residential and commercial properties in India with an investment of $275 million each.

There have been announcements of a number of funds by the GCC institutions intending to invest in Indian capital markets and private equity opportunities in India.

By Khalil Hanware

© Arab News 2007

 

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