I remember when I first joined a leading private retail bank in the UAE to work for its SME business banking unit, the huge number of financing scheme cases further to accounts opening applications we used to source from Indian clients who own and operate several small and medium businesses pan the seven Emirates. Indeed, those people are called real entrepreneurs who toil to create jobs, flourish economies and boost GDPs of nations. Today, I’ve been living and working for more than 12 years in the UAE to witness personally before my eyes how UAE evolved incessantly in making this part of the world an Eldorado and a hub for trade, business, entrepreneurship and opportunities. Recently, I was meeting an Indian businessman friend who works and lives in the UAE. Then, we debated and challenged this question: is UAE the right business destination for Indian entrepreneurs?
To begin this humble discussion, here below our essential arguments and in line of reasoning:
- The Next-Door Investment Destination
- An Investors’ Snapshot
- APT Conditions, Incentives Attract Investors
- OPPORTUNITIES Galore For Entrepreneurs To Tap
- Expanding Horizons
- The Golden Lines
The first thought that sparks when discussing Gulf region is oil and gas. Well, my Indian friends would agree with this statement: despite their control of over 40 percent of the world’s known oil reserves and almost a quarter of global natural gas reserves, the Gulf states are regarded as an extended economic arm and the gateway to Europe and Africa by the Indians. Certainly, the UAE being the most accessible Gulf nation – thanks to its liberal culture and economic prudence – has emerged as the favorite business destination for Indian professionals, expats, investors and entrepreneurs. And do you know WHY? Simply because everyone is witnessing the proactive commitment coming from the highest echelon of the political level which is attracting more Indian investors and entrepreneurs to explore and exploit growing opportunities in the Emirates. Well, this looks a great pre-debate warm-up! What’s more?
THE NEXT-DOOR INVESTMENT DESTINATION
Let’s do a flashback to History! I understand some people perceive History as a boring subject. However, History doesn’t happen in a vacuum. In this regards, I recall the famous quote of the late Shaikh Zayed, the founder of the United Arab Emirates who said “a nation without a past is a nation without a present or a future”. Similarly, a strong socio-economic relationship that goes back to the ancient times cements the UAE’s position as the next-door economic partner of India. Dubai has been India’s historical entrepot for trade with the Middle East. The shared colonial legacy under the British rule allowed a lot of commonalities in the administrative systems that encouraged Indian investors to set foot in the UAE.
With the UAE becoming a full-fledged nation-state in 1971, the economic relationship received a new fillip. A booming oil industry resulted in a rising number of Indians coming to the Emirates to work and invest. This resulted in a large expat community settling and anchoring Indian investments in the UAE’s diversified economy. Increasing political and cultural contacts resulted a substantive mutual relationship that aggrandized the investment flow in both directions. In short, that’s the past, the present and the flourishing future. Now, let’s have a look at some data.
AN INVESTORS’ SNAPSHOT
- USD 18.7 billion trade between UAE and India. So, the second biggest destination for Indian exports
- 2.8 million of Indians estimated to be living in the UAE. So, the largest Indian diaspora in the world.
- 1,065 weekly flights between two countries. An astounding number, right?
- Over 60,000 Indian companies are doing business in the UAE at present and most of them are in free trade zones.
- Indians top the list of investors in the UAE real estate sector. Similarly, they top the list of most successful rich entrepreneurs.
- Currency swap agreement allows businesses to trade in local currencies.
- Real estate, transport, IT, and energy are key sectors with the highest Indian FDI in UAE.
- Indian tourists constitute a significant percentage of foreign footfalls in the UAE.
Is this data enough? If not, let’s elaborate more on how UAE is a propitious market to do business! Before you scroll down, if you’re intending to start up your business in the UAE then let us introduce you to our top listed partners to GET FREE MULTIPLE QUOTES HERE!
APT CONDITIONS, INCENTIVES ATTRACT INVESTORS
We all live in the UAE admit how political stability, a generous society, and liberal economic regime form the trinity of attraction that draws many investors even from far away countries to the Emirates. So then what about an Indian investor with a flight time of 3 hours from Mumbai to Dubai?
Above all that, a strong leadership marked by peaceful transition has always been supportive of the economic process without any upheaval. Ever since its formation, the UAE has not seen any radical change in the economic policies allowing the growth momentum and investor-friendly ambiance to continue.
Simultaneously, the UAE government has made every possible endeavor to maintain the Emirates as a land of economic opportunities and peaceful living. Going a step further, the massive oil revenue is being used as a leveraging tool to keep the tax regime to the minimum:
- No corporate tax on companies (except oil & gas sector and foreign banks)
- No income tax.
- No tax on on remittance of dividends or royalties abroad.
Such a liberal tax regime is a great incentive for Indian entrepreneurs looking for foreign pastures to maximize their investments.
Having said that, look at this stunning rank in ease-of-doing-business index places the UAE among the top 20 countries in the world and obviously the foremost in the Gulf and the Arab world. Now when Indian investors ready to make their presence felt at the world stage, the Emirates in their vicinity extends an open invitation with all right conditions.
Simultaneously, recent steps, such as currency swap agreement, trade in local currencies, strategic partnership agreement, technical cooperation MoU, pact for cooperation in maritime and road transport, innovation, and SME level support, and trade remedial measures foster more confidence boosting the bilateral investment.
OPPORTUNITIES GALORE FOR ENTREPRENEURS TO TAP
The UAE is the most suitable place for Indian investors searching for exceptional investment opportunities outside their country. With a highly diversified economy backed by political resoluteness and top-class infrastructure, the country provides an impeccable prospect to invest and expand.
Real estate, transport, automobile, IT, food processing, and energy sectors are the primary draw for the Indian FDI in the UAE. The Indians spearhead the foreign investment in the Emirates’ real estate both in volume and numbers, only second to local residents and way above Arab investors.
While doing some research on the same line of thoughts, I found that the increasing preference for Indian investment in UAE real estate sector is manifold and carefully assessed. Cities, such as Dubai, Abu Dhabi, and Sharjah, are a lot cheaper than prime locations in Mumbai, Delhi, or Bangalore. For example, if an investor can buy 100 sqm in Mumbai for $1 million while in Dubai, the same amount can fetch a 160 sqm. In Dubai, you can have a property with a price tag of almost 60% of what you need to pay for the same in Delhi or Mumbai. It is even lesser compared to Bangalore and Hyderabad. And this comes with free parking, fittings, and fixtures, which are not included in India. You get the property price quoted for carpet area as opposed to the built-up area in Indian cities.
A property in the UAE offers close to 10% rental return – almost thrice of what an investor gets in India – making it easier to get back his investment in 10-12 years. The appreciation in Dirham and low-trading Rupee against US Dollar add to the overall return when remitted.
With spectacular commercial growth, the real estate investment offers a lucrative option. Increasing need for housing, office space, recreational avenues, lease-hold residential properties, hotels, shops, and retail stores, the sector is poised as the option for safe and gainful investment.
Apart from the economic aspects, Dubai Real Estate Regulatory authority or RERA offers blanket protection to investors. The money remains in an escrow account and the release is subject to on-site work progress. The property acquisition process is simple and does not leave you at the mercy of lawyers.
According to a Boston Consulting Group report, one in every eight global investors looks to the UAE as a favorable investment destination. The diversified economy riding on tax-free push and free zones is fast encompassing the “sunshine” sector of the economy. Consumer goods, hospitality, entertainment, and retail sectors swiftly expanding their footprints with eager investors pumping money into them. Growing commerce is opening up new vistas for both established businesses and startups. As a result, business consultancy, banking, and finance struggle to meet the expanding service needs.
All these modern sectors need IT solutions to supplement and complement their operations, and this presents a golden opportunity for the Indian IT companies, who lead the world in this segment. As the UAE has set its sight on becoming a knowledge-based economy driven by advanced skills, the scope expands further for investors from India, which is home to the third largest startup ecosystem in the world, to join the effort in turning the UAE as a technology hub.
The existence of perfect ecosystem seeds coupled with diverse base of industries and eclectic range of customers presents an enticement for Indian tech startups. Fintech startups from India have already their footprints thanks to Abu Dhabi’s proactive support that nurtures startups and insulates them from the burden of regulations for the first two years. The new visa regime offering 10 year stay and 100% ownership can provide a further boost to draw Indian startups in e-commerce, food and beverage, logistics, and transport.
Despite the introduction of Valued Added Tax (VAT) in The UAE, 5% tax appears to be reasonably priced compared to Indian VAT that arranges from 4% to 28% over four different slabs. Subsequently, the favorable liberal tax regime and the status of UAE as an international market that responds well to expectations gives a real attraction to higher returns on investment. Having said that, the geographical proximity with the large Indian community make the Emirates a perfect springboard for India’s talent and capital in Artificial Intelligence or AI, Blockchain Technologies, Health-Tech, Fin-Tech, Deep-Tech, Reg-Tech, Cloud Networking, SaaS, and other tech fields. Adding to these, is the greatly streamlined process of setting up a start-up company. Institutional supports, such as the Dubai Future Accelerators program even goes a step ahead to provide selected tech startups free airfares, workspace , incubation hubs, access to mentors and even angel investors or venture capitalists.
Transport and automobile sector too is a draw for Indian investors. With their low-cost solutions, wider global experience, and home-grown manpower, Indian companies have a good chance in this expanding area of the economy. Dubai and Abu Dhabi are fast turning into hubs of medical tourism and healthcare. The location close to the confluence of Asia, Africa, and Europe makes them a perfect destination for patients looking to recover and recuperate. With their health expertise, operational profile, and service record, different Indian hospital groups stand a chance to quickly expand their business and tap into this growing sector.
Another key area where Indian investors have a good chance is the farming sector. The national government is pushing vehemently for the growth of agriculture and animal husbandry in the UAE. Despite the technology uprising, the agriculture penetration is low and the market is at a nascent stage. Be it organic farms, animal farms, agrotech, plant perfection, agro product manufacturing and processing, and biotechnology research related to this sector look for leads to unleash its growth potential.
THE GOLDEN LINES
The UAE is home to 2.8-million strong Indian diaspora, about 28% of total residents in the seven emirates. An Indian investor, thus, has a home away from home, when he ventures into the golden waters of this Gulf nation. He can have support and affinity from the Indian community that adds to his business prospects.
Free trade zones in the UAE are set up with a plethora of business advantages for foreign investors. The startup is easy with swift licensing, labor, and immigration procedures. An investor can have 100% ownership of his venture without any need for a local sponsor or broker. There is minimum documentation. He can have 100% repartition of profits and won’t have to pay corporate taxes, and personal levies.
Aided by its world-class infrastructure, the UAE can be the best gateway to Africa and Europe for Indian investors. The best-in-class air connectivity, geographical locations, 120 shipping lines, business centers, and astute financial industry allows your business to make the most of the facilities, flourish, and succeed.
The recent UAE decision to introduce a 10-year visa for investors with 100% business ownership is another boost. It is backed by offers, such as a six-month extension to those looking for a job, suspension of schools fees, easing fines on expired business licenses, and the stimulus from the visa deposit fund.
Among other things that encourage potential investment from India is the “’liberated remittance scheme – LBR” approved by the Reserve Bank of India, RBI. It permits transfer of $250,000 per year by an Indian investor resident abroad. Considering Rupee fluctuation and Dirham appreciation against Dollar, such an amount can get a handsome profit in a few years.
To wrap it up, don’t wait for opportunities or the right moment to come! Invest now and let us introduce you to our best partners in setting up your business quickly so you save your time and money! GET FREE MULTIPLE QUOTES NOW
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