Expert Analysis of the Global Macro Events affecting the Indian Markets – 23 Feb. 2024

Last week, the foundation for Bharat Mart, a mini India was officially laid in UAE. I was reading about the establishment when I came across some facts about India and UAE’s cultural and trade relations. As I was reading about it, I went from Bharat Mart to CEPA to BIT and more. Initially, I was going to talk about just Bharat Mart today but now that I know how interesting the overall relations are, I won’t keep myself from sharing it with you. 

UAE is the second home for almost 4 million Indians, maybe even the first. I am sure you’d have a friend or an acquaintance residing in the Emirates too. After all, the UAE is one of the easiest countries for Indians to move to which has resulted in: 

1. a) Indians making up over 38% of the UAE’s total population, and 
2. b) UAE being the country with the largest number of Indian immigrants. It goes both ways.

This calls for well-functioning trade and cultural relations between the countries, and over the last decade, Prime Minister Modi has been extensively working on establishing these relations. PM visited UAE just last week and signed multiple agreements. 

By now, India and UAE have splendid international relations fueled by multiple agreements and pacts over the years. In fact, a mini India called Bharat Mart is now opening up in UAE. Let me start with that!

A Large Mini India in UAE – Bharat Mart 

Bharat Mart, as the name suggests is an Indian mart, but it’s not like your usual supermarket. Bharat Mart, which is to be spread across 2.7 mn square feet of land (Phase 1 is 100,000 sq ft) is going to be a mega project. It’ll house over 1500 showrooms, light industrial units, offices, and most importantly – a huge warehousing space for both B2B and BC2. By 2026, it’s expected to be a functioning marketplace in the heart of Dubai, the Jebel Ali Free Zone or JAFZA. It’ll be more than just a place for Indians in the UAE to visit when they’re homesick. Let’s see how:

• Bharat Mart is located just a few kilometers away from the Middle East’s largest seaport – the Jebel Ali Port. 
• The marketplace will give Indian exporters access to not just the UAE but demographics like West Asia, Europe, the US, and Africa too. 
• Convenient access to 150 maritime destinations and airlink to over 300 cities. 

Overall, the establishment holds great significance towards helping India’s SMEs with exports and increasing India-UAE’s bilateral trade relations. 

Bharat Mart will also serve as a competition to China’s Dragon Mart. Let’s talk about the Dragon Mart to understand how! 

China’s Dragon Mart first set up in the UAE in 2007 serves as a hub for both Chinese residents in the UAE and a marketplace for some of the cheapest products in Dubai. The place gets about 40 million annual visits even though there are only about 300,000 Chinese expats in the country. Think of the scale Bharat Mart can have with the number of Indians and South Asians residing in UAE.

Fun Fact: Only about 11.5% of UAE’s total population is Emirati, the rest is all expats! 

That’s all about Dragon Mart, the globe is shifting focus away from the dragon, and so shall I. 

DP World – The Company Building Bharat Mart 

This Emirati logistics company is helping Indian businesses go places (literally), and the Bharat Mart is not the first medium. Around 3 years ago, DP World announced the India Business Incubator inviting Indian startups to Jafza – the same area that will now house the Bharat Mart. DP World offered Indian startups massive subsidies and incentives to set up a base in Dubai. Why am I talking about it now? DP World is owned by the government of UAE and its steps to help India are indicative of UAE’s support to India. 

India-UAE Relations Over The Years 

It was in 1972 that trade officially got some attention from the two countries as diplomatic trade was established. However, things took up pace in 2015 when PM Modi first visited the UAE. It has been flourishing since, take a look at the graph for an insight. 

UAE is our second-largest export destination and third-largest trade partner, but currently, the trade mainly consists of India’s oil imports. Both countries have been trying to change this for some time now.  The broad aim here is to increase the non-oil trade between the countries to $100 billion over the next five years (from the current $60 bn). 

I won’t bore you with the details of every agreement and pact but I will list down a couple of significant agreements that have been taken up by the countries lately. 

Comprehensive Economic Partnership Agreement – Feb ‘22

CEPA was signed to boost economic relations between the countries. This is where the $100 bn non-oil trade target came from. It has given zero duty to 90% of products from India, elimination of tariff duties by both countries, and more steps to smoothen up trade. 

Bilateral Investment Treaty and Agreements – Feb ‘23

• During his visit to UAE, when PM Modi inaugurated the first Hindu temple in Abu Dhabi, a bunch of pacts were also signed. First of these is the BIT wherein both the countries committed to increased investments. The BIT is great for India as UAE is already our 7th largest FDI investor. Earlier last October, the Abu Dhabi Investment Authority committed to invest a whopping $75 bn in India’s infrastructure sector. 
• Agreement to develop the India-Middle East-Europe Economic Corridor as discussed during the G20 summit. 
• Steps to link our payment systems and domestic cards to smoothen the payment exchanges between the countries. 
• Pacts to enable energy and digital public infrastructure cooperation. 

It’s a lot of pacts and agreements but the takeaway here is that India and UAE are establishing strong relations fueled by cultural, religious, and economic ties. 

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