The UAE is All Set for USD 7 Billion Investments in India’s Food Sector Over the Next Three Years

UAE business entities, coordinated by Dubai based Emaar group will invest up to USD billions in India’s food sector over the next three years as a part of the UAE-India food corridor project. The investment is planned for the mutual benefit of two nations with the core focus of UAE’s food security and company formation in India.

UAE- India diplomatic ties date back to 1972 and have developed as a strategic partnership over the years. UAE is the third-largest trading partner of India with an annual trade volume of approximately USD 60 billion.

The National Strategy for Food Security was presented during UAE Government’s second annual meeting in November 2018 with its objectives focused on ‘facilitating the global food trade, diversifying food import sources identifying alternative supply schemes, and covering three to five sources for each major food category.’

In line with its National Food Security 2051, the UAE has a concrete and robust plan of investment in India for developing food security and in the sector including agricultural produce as well as logistics for storage and transport.

In a recently held two days of food conclave on 7th and 8th December 2020 between the two countries, UAE confirmed its investment of USD 7 billion in Food-Corridor.

Two UAE based companies, DP World and Dubai Multi Commodities Centre (DMCC) are already working on possible tie-ups with Indian companies and farmers. While DP World is exploring synergies for Integrated Supply chain solutions, DMCC with its agriculture trading platform “Agriota” will connect Indian farmers with the food companies in the UAE for promoting agriculture import from India.

The Emaar group, a real estate company in the UAE will invest USD 5 billion in setting up mega food parks, logistics and warehouse hubs, fruits and vegetable hubs in several Indian cities and USD 2 billion in contract farming, and sourcing of agricultural commodities and related infrastructures.

“Considering our strategic relationship, I strongly believe that this is an opportune time for UAE and India to escalate food security cooperation,” remarked Ahmed Al Banna, UAE’s Ambassador to India in a public briefing. UAE’s investment in eight food parks in Madhya Pradesh in India is a testimony to this statement. This project will benefit 2 crore Indian farmers and will create 20,000 new employments by establishing logistics and agriculture infrastructures. The food park projects are essentially planned to keep in mind the farmers from Punjab and Maharashtra, the two most fertile Indian states with excess agriculture produce.

UAE choosing India over other adjacent gulf countries as a food security partner doesn’t come without reasons. Firstly, India with its vast fertile land bank and geographic climate has tremendous potential in agriculture and becomes a food surplus nation. As per a report, approximately 30 per cent of agriculture produce goes waste due to shortages of appropriate storage and other logistics facilities. Agriculture export to the UAE will not only prevent this huge wastage but will also pave the path for additional income for Indian farmers who are currently demonstrating in Delhi for the Minimum Support Price (MSP). This will help alleviate Indian farmers’ monetary concerns and direct contact with the companies will free them from the clutches of middlemen.

Secondly, UAE’s climate is not conducive for agriculture and farming and partnering with India in its food security programme can bring its objectives to fruition. The long-standing diplomatic ties with UAE is thus a guiding factor in choosing India as its reliable partner.

Thirdly, UAE is one of the biggest trading partners of India and there are already regular trades in oil and petroleum. India presently imports approximately 8 per cent of its oil requirements from UAE.

Last but not the least, this investment will help promote the UAE’s logistics and services sectors and lower food prices from India can hugely benefit UAE economically.

It is worth noting that a Minister from the Punjab government, Rana Gurmeet Singh Sodhi, invited UAE investors to set up food processing industries in the state who can benefit from a reliable and steady source of crops and can avail efficient logistics support through a company formation in Delhi.

With increasing business and FDI policy reforms, India is becoming an attractive business destination for foreign investors easing the incorporation steps–for–companies-in–India. The recently launched production linked incentive scheme will also make India lucrative to foreign companies. Even the presently introduced more lenient insolvency and bankruptcy act will help foreign investment flow in India.