review of literature - inflibnetshodhganga.inflibnet.ac.in/bitstream/10603/8735/10/10_chapter...
TRANSCRIPT
Chapter-II
REVIEW OF LITERATURE
The present study is designed to examine India’s trade
relationship with United Arab Emirates in the post-liberalization
period. A comprehensive review of literature relevant to the area of
research is essential as it places the research study in its proper
perspective by indicating the amount of work already done. This
would help in deriving intellectual and practical solutions to the
problem through the application of scientific methods and
understanding of the work done so far. As a researcher it is
important to be familiar with and aware of the work done in the
related areas to get right approach of the issues. Review of
literature provides the background information to aid the researcher
in designing and analyzing the research work. The reviews throw
light on different angles of India’s trade relationship with United
Arab Emirates in the post-liberalization period.
Sujit Chatterjee (1987) in his article “India’s Trade with the
Emirates” has observed that the upward evaluation of Japanese Yen
along with the West German Mark and other European currencies
from 1985 has provided a good opportunity for India to enlarge its
exports of industrial products to the United Arab Emirates.
However, the author has expressed the view that the UAE like the
Middle East as a whole is no longer on easy market and demands a
high level of sophistication in marketing and selling.
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The author has observed further that for the Indian exporter
and manufacturer UAE presents a test field for the competitive
ability of their products both in terms of price and quality against
international competition. It may be interesting to note, says the
author, that besides the developing nations China has a strong
presence in the market and Poland has lately made an entry to earn
foreign exchange.
Sushma Ramachandran (1996) in her article “Keeping
Pace with the World” has referred to the new approach of ‘product
country matrix’ proposed by P. Chidambaram – the country’s
Minister of Commerce in 1996. The matrix approach is based on the
assessment that 15 destinations account for nearly $ 20 billion of
India’s total exports of $ 26.2 billion. Similarly 15 products account
for $ 17 billion of total products. The first conclusion arrived at by
the ministry through the matrix approach is that India should focus
on markets with per capita income of over $ 20,000. The second
conclusion is that India’s share in the world market should be
increased where it already has a presence. M/s Sushma
Ramachandran has observed “A more detailed look at the matrix
shows where the new products have the greatest potential. For
instance 46 percent of silk readymade garments are being sold in
United States, which is also the largest market for woolen
garments. On the other hand Russia is the biggest destination for
cosmetics and toiletries, while UAE imports the largest amount of
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fruits and vegetables from here. The UK and US are emerging as a
destination for sports goods but Australia and Germany also show
considerable potential. Similarly one of the new markets Australia
seems to have a stable potential market for cotton yarn, fabrics and
made ups as well as cotton readymade garments. Nigeria is also
becoming a big importer of drugs and pharmaceuticals, while meat
and meat products appear a prospective area in Malaysia. A detailed
analysis of the matrix can thus prove a fruitful study for exporters
to enable them to plan their market strategies”.
Vimala Vasan (2000) in her article “Indian Companies
Warm up to UAE Free Zones” has mentioned that nearly 600 Indian
companies are operating out of UAE free zones forming a majority
country-wise, in some of the zones, situated mainly in the Northern
Emirates. The major incentive in the free zones is 100 percent
ownership by the foreign company. Indian companies have been
motivated to move into the free zones in view of the cent percent
ownership facility coupled with the tax-free regime. Proximity to
ports and airports – a major factor for firms involved in the re-
export business, import/export duty exemption, capital and profit
repatriation, sound infrastructural facilities, cheaper labour and
other costs, exposure to the international market, place and ability
to network easily with the rest of the world are other factors that
have made the free zones attractive.
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C. Ranga Rajan (2001) in his article “Saga of Paradigm
Shifts” has observed that import substitution constituted the major
plank of India’s foreign trade policy and the planners almost chose
to ignore the option of foreign trade as an engine of economic
growth. This was mainly due to highly pessimistic view taken on the
potential for export earnings. A further impetus to the inward
orientation was provided by the existence of vast domestic market.
In retrospect the author feels it is clear that the policy makers not
only underestimated the export possibilities but also the import
intensity of the import substitution process itself.
R.K. Rana and Kuldeep Singh (2001) in their article
“India’s Trade under the WTO – An Empirical Analysis” have tried to
ascertain the trade deficit of the Indian economy by adopting a
variety of methods and using time series data. The impact of WTO
on the trade deficit of the economy has also been analysed. In both
the export and import functions the relationship between these
variables and foreign and home tariffs (Before and during WTO) is
found negative. The authors have argued that to promote exports it
is necessary that foreign tariffs be lowered keeping other things
constant. They have further suggested that besides gauging
through the impact of the WTO on trade deficit we must
simultaneously improve the internal position of the economy. It is
because the two kinds of balances are not substitutes but are
complementary to each other, indeed one reinforces the other.
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Somasri Mukhopadhyaya (2001) in his paper “Uruguay
Round and India’s Export Response” has tried to analyse whether
Uruguay Round has been a success story for international trade with
particular reference to India. He has mentioned that since 1997
there has been a tremendous drop in the growth of world trade. He
has cited the two international developments – the currency crisis of
1997 in SE Asian Nations and the introduction of Euro currency. He
mentions the non-materialization of the obligations that were
accepted by developed countries especially in the agricultural
sector. Another factor cited by the author pertains to the textile
sector in the context of MFA phasing out. In case of India too, our
export growth dropped to 5 percent in the post Uruguay Round
period and then became negative in dollar terms. Hence India has
not achieved what we have expected while signing the Uruguay
Round Agreement. Our attitude towards exports has changed. We
have continued our process of global integration keeping in mind
our obligations and commitments to the World Trade Organization.
The author perceives that we are now gradually moving towards a
competitive market scenario rather than a protected one. The
author has suggested that India must look at new pastures for
which she has adequate domestic capabilities and promising export
expansion.
Sushma Ramachandran (2001) in her article “Revamping
Export Strategy” has observed that success in global trade in any
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area will depend largely on the extent to which Indian exports are
able to remain competitive in world markets. The author has opined
that prospects of India raising its share in world trade seem to be
receding despite a buoyant 20 percent rise in exports during 2000-
01. She has opined further that the global economic slow down has
come in the way with the country’s two largest markets, the US and
Japan slowing down on the economic front. The dip in the consumer
demand is also affecting exports though it is not yet clear how far
exports growth will be affected. M/s Sushma has referred to the
new export strategy of the government, which envisages replacing
the existing incentive schemes with new schemes wherever
necessary and reducing all indirect taxes affecting exports.
Elaborating the government policy for the promotion of Indian
exports the author has mentioned the proposals for entering into
suitable free trade area agreements and memorandum of
understanding for specific products with select countries. Such
agreements will be entered into where complementarity exists. A
proactive approach for promoting services exports along with efforts
to develop export potentials of the hardware sector has been
envisaged. Making a dent in the hardware sector is expected to
sustain the momentum already achieved in the software sector. The
author has stressed the need for promoting exports from farm
sector and setting up of Special Economic Zones (SEZs) only for
exports.
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Azhar Muhammad (2003) in his analysis of “Economic
Co-operation between India and the United Arab Emirates in the
1990s” has observed that trade and other forms of economic
co-operation between India and the United Arab Emirates are
sizeable. The author has mentioned that empirically it has been
observed that Indo-UAE trade during the period of analysis
increased faster than the increase in both UAE and Indian trade with
the world. Further Indian exports during the period to UAE grew
rapidly compared with the growth in Indian global exports. Despite
these positive trends India has had a persistent balance of trade
deficit with the UAE. However UAE is a host to over 0.4 million
Indian expatriates who are an important source of foreign exchange
earnings for India. UAE is important as far as remittances inflow is
concerned. UAE extended financial aid to India during massive oil
revenue in 1970s and 1980s though financial aid ceased when oil
revenues declined. India and the UAE have excelled in establishing
joint ventures. The overall performance of Indo-UAE economic
co-operation during the study period has been found satisfactory
according to the author. However the author perceives that India
has to make further efforts to enhance its exports and other areas
of trade to improve economic co-operation between the two
countries.
Chawla R.L. (2003) in the article “India and WTO” has
affirmed that India’s liberalizing policy as well as significant
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structural and trade reforms have clearly paid off as India’s
economic performances are distinctly impressive in these days. The
average annual growth rate of GDP was 6% despite the recent
increase in international petroleum prices. GDP growth for 2006-07
was 9% services continued to be the largest contributor to GDP
(54%) while share of manufactures remained stable at around 16%
of GDP. Agriculture’s share declined to around 18.3% of GDP in
2006. These results are impressive, and are due to important
unilateral reforms aimed at opening up Indian economy and trade.
Chaisse J. (2005) in the article “Ensuring the Conformity of
Domestic Law with WTO Law in India – A Case Study” has observed
that India is a part of key international conventions. It has
progressively made its domestic legislation conform to the WTO
Agreement on Trade Related Aspects of Intellectual Property Rights
(TRIPS) while enjoying a longer period of implementation by virtue
of being a developing country. The 1970 Patents Act was amended
in 1999, 2002 and 2005 with this aim revisions are partly the
consequence of the WTO.
A.K. Pasha (2005) in his article “Trade Energy and Labour
Dominate GCC – India Ties” has observed that GCC – India relations
have continued to expand in new areas, while the consolidation
process in other areas accelerated. India’s largest trading partner in
the GCC has been the UAE. In order to expand the range of
products that India can export, the second Amazing India – 2005
31
exhibition – a show case of products and services from India opened
in Dubai. The author has further observed that the earlier trade
exhibitions have been quite successful in strengthening trade and
economic ties between the two countries. It is interesting to note
that growth in the field of information technology exports has also
been significant. The author has predicted great strides in the
growth of trade in services like shipping, air services and in gas
supply from Qatar to India and in banking, etc.
L. Ganesh (2005) in his article “Free Trade Agreement –
Growth or Distortion?” has emphasized that Free Trade Agreements
are essentially bilateral agreements or multilateral agreements
among a group of countries as against universal agreements
envisages by WTO among all members. Free Trade Agreement
championed by the US and Europe through the WTO have been
facing a number of obstacles for the following reasons.
The so called developed countries, push agenda that suit their
particular economic interests in the name of free trade.
Developing countries like India have recently united to jointly
oppose such moves.
The author says that in a bilateral situation unless the
economies of the two countries complement each other it can never
work for the benefit of both. Further the two markets have to be
nearly equal and preferably complementary to benefit from a
mutual FTA. The FTA regime warrants a minimum value addition
32
within the two countries to be eligible for concessional or nil tariff.
The concept of Rules of Origin is used to ensure this. The author
suggests that to prevent misuse of products being made elsewhere
and then packaged in one of the FTA countries needs transparent
and honest governance resulting in strict enforcement of rules. The
author has referred to the views of Bhagawati and Paagariya that
trade creation is unlikely if members of Regional Trade Agreement
are small in relation to the outside world. Consequently trade
diversion is likely to be more dominant effect. The author has
suggested for gradual reduction of all import tariff to a reasonable
and comparable levels with other similarly developed countries. This
will also avoid the retrograde movement to era of special
concessions, dispensations and quantitative restrictions.
Mukherjee I.N. (2005) in his paper “South Asia Free Trade
Area and Indo-Pakistan Trade” has referred to the declining trade
relations between India and Pakistan. He has mentioned in his
paper that Pakistan accounts for less than 1 percent of India’s trade
and India accounts for under 5 percent of Pakistan’s trade
compared with very large trade shares prior to independence of the
two countries in 1947. In 1948-49, 70% Pakistan’s trading
transactions were with India, while 63% of Indian exports went to
Pakistan. Estimates from gravity model suggest that trade between
the two countries could be 5 to 10 times larger than the present $ 2
billion a year, thereby raising GDP and household incomes in both
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countries. Informal trade via third country (such as the UAE
specifically Dubai) is estimated some $ 2 billion to $ 3 billion per
year.
Samir Ranjan Pradhan (2006) in his report “India’s Export
Potential to the Gulf Cooperation Council (GCC) Countries : A
Gravity Model Analysis” has provided some significant trends
regarding India’s export potentials in the GCC countries. The author
says that his workhorse (augmented) gravity model shows that the
magnitude of India’s export potential is highest with Oman, followed
by Qatar, Bahrain and Kuwait. He further says that all the model
specifications consistently show no export potential with UAE and
Saudi Arabia. This implies that currently India is overtraded with
UAE and Saudi Arabia as they are the largest two trading partners
of India in the GCC and India’s export trade is not diversified and
confined to limited number of items. Moreover the results show
sharp increase in the magnitude of India’s export potentials to
Oman, Qatar, Bahrain and Kuwait. In addition the study shows
similar trends of India’s export potentials to the GCC countries.
Sujitha Beevi Karayil (2007) in the article “Does Migration
Matter in Trade – A Study of India’s Exports to the GCC Countries”
has examined India’s exports to the Gulf Cooperation Council (GCC)
countries with special focus on the influence of migration. The
author has analysed the demand pattern of GCC as represented by
its import structure with a view to explain the growing orientation of
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India’s exports towards the Gulf countries. The Gulf countries’
import structure reveals the influence of the Indian Diaspora and
the possible migration-trade link. The author has verified the
hypothesis of migration-trade nexus using a longitudinal gravity-
type model. The econometric evidence also illustrates the strong
immigrant preference effect for their home-country products. The
author has thus concluded that the preference similarity mechanism
is seen to work in the India-GCC context, despite the violation of its
crucial assumption of income similarity. Overall, the study brings
out the importance of migrant population as a unique source of
advantage for India’s exports to the region.
Atul Aneja (2007) in his article “India’s Trade with UAE on
High Growth Path” has indicated that poised for exponential growth,
India and the United Arab Emirates (UAE) are rediscovering each
other as valued economic partners. Indian companies are arriving in
the UAE in droves as the country has already positioned itself as a
major global destination of trade, investments and services. The
author has tried to link up the fast growing Indian economy with
greater need for energy which UAE is in a position to meet with its
rich oil deposits. The author has referred to the information
provided by the UAE Government. He has mentioned that India is
now ahead of Japan as the leading export market for Abu Dhabi’s
refined products, substantial volumes of Kerosene and LPG.
Covering a period of 5 years, from 2002 to 2006 total trade
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between Dubai and India soared from $ 2.5 billion to a high of $
10.9 billion. Indian firms have moved a big way to the free zones
set up in the UAE in order to take advantage of the liberalized
business environment that prevails there.
Divya Aggarwal and Arun Chaudhry (2008) in their
report “Trade Flows between India and UAE – Current Status and
Future Prospects” have concluded that as India’s own export
networks are developing, the use of UAE as an intermediary trading
hub is expected to be on the decline. This trend according to the
authors has already started reflecting in a few sectors like textiles,
diamonds and precious metals, which used UAE extensively as a re-
export centre. The trade flows in several non-traditional sectors
have started to grow rapidly, these being pharmaceuticals,
electronics and agro products. There is also a shift in the emphasis
from commodities trade to the services sector. This has also been
reflected in the FTA negotiations where emphasis is being given on
FDI inflows on both the sides by promoting joint ventures and
investments. The study by the authors has revealed that some of
the sectors becoming valuable due to increasing importance of
services in the economies of the two countries are infrastructure,
power, education, biotechnology and information technology. The
authors have referred to the prediction made by the Electronics and
Computer Software Export Promotion Council (ESC), India, that
India’s IT exports to the UAE are expected to jump from $ 542
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million in 2005-06 to $ 850 million in 2006-07 making a 56.74
percent rise.
Laurence Henry (2008) in “India’s International Trade
Policy” has observed that Indian international trade policy is a good
example of the central contradiction in India’s economic policy, itself
a reflection of the present political situation in New Delhi. The
author comprehends that Indian trade appears less open and less
liberalized than the number of its economic and trade agreements
would suggest at first sight. Even with FTAs, India’s agreements so
far remain merely preferential tariff agreements, since they include
only positive lists of items. In Indian trade agreements, a balance is
often sought between classic diplomatic and intergovernmental
means and a more expert and time-limited dispute settlement
mechanism. The trends towards multiplication of bilateral and
regional agreements in parallel with WTO obligations are not
particular to India but are rather universal, especially as states
await radical change to the global system.
Samir Ranjan Pradhan (2008) in his book “India, GCC and
the Global Energy Regime – Exploring Interdependence and Outlook
for Collaboration” has focused on issues of energy security,
particularly the energy regime in India and its relationship to the
GCC. The analysis looks at the specifics of oil trade between India
and the Gulf Cooperation Council (GCC) highlighting their growing
interdependence and trade relations. The book explores the
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structural shifts and transformations in the global oil regime which
are in effect redefining patterns of trade, pricing, etc. The author
comprehends that the oil prices are no longer set by the seller alone
but by assorted factors and actions of various market participants,
instead of traditional OPEC versus non-OPEC rivalry, it is now a
trend to focus on patterns of trade. The location of the demand
market has also shifted from the Atlantic to Asia-India and China in
particular. There is now what is referred to as the demand heartland
comprising Asian economies of Japan, China, India, South Korea
and the ASEAN and resource periphery that includes Siberia, Russia,
Central Asia, Iran and the Gulf states.
The book comprises six chapters devoted to (i) the transition
of global oil and gas regime, (ii) the changing patterns of global
energy trade, (iii) the pattern of energy interdependence developing
between India and the GCC, (iv) the issues of energy security, (v)
vulnerabilities and (vi) the competition-interdependence dilemma in
Asia and its implications for India’s Gulf strategy. The book by Dr.
Pradhan is valuable in highlighting the key dynamics of the
contemporary debate surrounding the trade of oil and gas. The
author has efficiently dealt with the entire gamut of issues in the
India – GCC partnership.
Zakir Hussain (2008) in “India’s Economic Relations with
GCC States – A Study of Labour Migration and Energy Dimension
During the Post – 1990 Period” has observed that two components,
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movement of labour and transfer of energy resources, have been
two significant complementary pillars which sustained and ushered
the Indo-GCC economic relations into new era of post – 1990 which
is marked by globalization, liberalization and privatization. The
author has rightly concluded that these two components which most
of the time seem mutually reinforcing upon each other prepared the
level playing field for exploring, expanding and boosting our existing
relations in new fields such as finance, service sector, technology
transfer, IT, education than confining only to the two elements,
labour and energy resources. The author has suggested that it is
utmost important for India to engage, develop and expand its
relations with the GCC countries in more diversified fields at least
until India is able to discover new sources or destinations of energy,
which are relatively stable and secured. The region is very
significant for India; it sources more than 65 percent of oil it
consumes, receives approximately $ 19-20 billion remittances
remitted by more than 5 million expatriates living and working
there, its non-oil trade has now touched approximately more than $
50 billion. The author has further argued that besides this,
strategically the region is very crucial for India to maintain its
communication links with Europe and further, the sea routes are life
line of Indian maritime trade and energy as more than 65% trade
passes through the same region. Thus looking at these factors the
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study emphasizes a deeper engagement with the GCC countries in a
more affirmative manner than what has been in the earlier decades.
David K. Parks (2009) in his article “Indian SME’s Striking
Gold in Sharjah” has highlighted the opportunities for investment
and trade for India in Sharjah – the industrial heart land of UAE. He
has referred to the free trade and specialized industrial zones
serviced by an integrated transport system and highly developed
infrastructure in Sharjah. The well developed industrial base and
vibrant market in the Emirates has enabled Sharjah to position itself
as a leading economic power in the world market. Oil, gas, steel,
aluminium, chemicals, agriculture, livestock rearing are key
industries driving Sharjah’s economy. India is one of the foremost
trading partners of the Emirate of Sharjah. Bilateral trade between
the two countries has witnessed quantum increase in the past few
years. Growing trade between India and Sharjah has made it easier
for SMEs on both the sides to seek co-operation in sectors like
infrastructure development, information technology (IT), tourism,
gems and jewellery, oil and gas, chemicals and petrochemicals and
drugs and pharmaceuticals. The author contends that the growing
co-operation between SMEs of both the countries and inking of
deals and trade agreements have further strengthened the multi-
dimensional relationship shared by both India and Sharjah.
Shubhomita Bose (2009) in her article “Indian Food Finds
Favour in the UAE” has mentioned that in recent times, the Indian F
40
and B industry has shown great potential to emerge as the biggest
revenue-generating segment in the country. Ranked as the world’s
second-largest food producer after China, the Indian F and B
industry is currently estimated at around $ 182 billion. India’s food
manufacturers, especially the small sized enterprises are exploring
new destinations to increase exports. The UAE is among the world’s
most economically developed countries. According to trade analysts,
UAE’s economy will continue to grow even at a time when most
developed countries are struggling due to the economic recession.
UAE imports around 60% of its food from Asian and African
countries. Owing to the huge demand for cereals and other food
products in the UAE, the country has approached Asian countries
like India to supply rice, wheat and other food products. Food
exports to the UAE are estimated at around $ 3 billion annually. The
author suggests that to gain from the UAE’s business friendly
environment, Indian food companies should offer high-quality
products to consumers who have a high purchasing power.
Samir Pradhan (2009) in “India’s Economic and Political
Presence in the Gulf : A Gulf Perspective” has observed that Indian
presence in the Gulf region is civilizational which has developed into
a vibrant relationship over the years, primarily based on a
complementary abundance of entrepreneurial skill and wealth. With
the emergence of India as a large economic power in recent years
and simultaneously the Gulf region witnessing spectacular economic
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growth, economic trends are reinforcing mutual interdependence.
While India’s economic presence in the region has transformed from
barter exchanges between merchants and Indian human capital
foiling the Gulf’s oil-industrial development, India’s political presence
has remained more or less subdued. The author has perceived that
the growing economic presence of India in the Gulf and the Gulf’s
new geo-economic realities provide the platform to synergize
complementarities into multi-pronged stable relations. The
relationship between the two regions has been in focus in the
evolving interdependence centering on energy-economy dynamics
and changed geopolitical environment in the aftermath of the 9/11
attacks.
Harsh Pant (2009) in his article “Looking Beyond Tehran :
India’s Rising Stakes in the Gulf” has underlined the fact that as a
group, the GCC is India’s second largest trading partner. It is the
single origin of imports into India and the second largest destination
for exports from India. Bilateral trade between India and the GCC is
expected to rise above $ 25 billion by 2010. The UAE by itself is
among India’s five largest trading partners and India’s top trading
partner in the entire Middle-East, accounting for 75 percent of
India’s exports to the GCC countries and 6 percent of India’s global
exports. Bilateral trade between India and the UAE is valued at $ 14
billion having tripled over the last five years. The author has opined
that the global financial melt down and the specter of recession in
42
the US and the Europe is further prompting India to turn to Gulf
States sitting on huge resources looking for investment
opportunities. The GCC countries remain a major destination for
Indian investments even as India is making a concerted attempt to
encourage GCC investments in India. India is hoping that major
GCC states such as Saudi Arabia, UAE and Oman would participate
in India’s planned expansion of infrastructure.
Energy is clearly the driving force in Gulf India relations.
Saudi Arabia is the chief supplier of oil to India’s booming economy.
The GCC countries supply 45 percent of India’s petroleum
requirements. Along with the Saudis who are responsible for a
quarter other major suppliers are Kuwait and the UAE. The revival
of trade and investment between the Gulf and India, featuring large
movements of goods and capital, is founded on the search for
energy sufficiency, a new security landscape and very rapid
economic growth.
Yousef Diab (2010) in his study “Studies on Development of
Export Markets – Indian Markets” has made an exhaustive analysis
of the trade and economic co-operation between India and the
United Arab Emirates. The author has divided his analysis into three
parts. The first part of his study comprises of detailed analysis of
India’s economic scenario with special focus on investment climate
and the sectors attracting investment, agreements between India
and the world, dimensions of India’s foreign trade in general, India’s
43
non-oil exports and re-exports to the world and India’s imports from
the world. The author has marshalled useful and relevant data
relating to the different economic indicators of India’s trade and
investment parameters.
The second part of the analysis is focused on economic
relations between India and the UAE, India’s investment in the UAE,
UAE’s investments in India, agreements between UAE, the GCC and
India, prospects of co-operation between India and UAE and the
visits of delegations and personalities. This part of the study is
highly informative and directly related to the topic of the present
research work. The arguments and explanations on the different
aspects of the economic relations between the two countries are
enlightening and analytical.
The third part of the analysis provides details of foreign trade
between India and the UAE, UAE’s non-oil exports to India, UAE’s
imports from India, UAE’s re-exports to India. The author’s
presentation is backed up with necessary statistical support in the
different aspects of trade between India and UAE’s. The discussion
and the information in this part provide a good backdrop to the
thesis of the present research work.
The author has provided a brief summary of the analysis in
the three parts of this study in the conclusion part at the end.
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Kamco Research (2011) in “United Arab Emirates (UAE) –
Economic Brief and Outlook 2011” has reported that foreign trade
plays an essential part in the UAE’s economy, more importantly oil.
India, China, the USA, Germany and Iran play an essential role
within the UAE’s trade as they represent 40 percent of the UAE’s
trade. As a result it is likely that in the future the UAE will look to
maintain and further strengthen its ties with the major business and
trading partners while also developing ties with new partners as a
means of increasing its trading activity while enabling to it further
diversify its economy away from oil, as stipulated through each
respective emirate’s long term strategic plans. The world’s economic
situation caused growth in trade to slow in 2009 as the total value
of the UAE’s trade reached AED 660.4 billion (USD 179.8 billion)
compared to AED 788.9 billion (USD 214.8 billion) in 2008,
representing a 16 percent drop in foreign trade. Trade with major
foreign partners slumped on the back of lower demand and
economic activity-in line with the economic slowdown.