Why UAE is India’s second biggest export destination?
The United Arab Emirates (UAE) is India’s second biggest export destination, accounting for about 9.2% of India’s total exports. The two countries have a strong economic relationship, with bilateral trade reaching $60 billion in 2020-21. The reasons behind this strong trade relationship and why UAE is such an important market for Indian exports :
- Geographical Proximity:
One of the main reasons for the strong trade relationship between India and the UAE is their geographical proximity. The UAE is located at the crossroads of Europe, Asia, and Africa, making it an ideal hub for trade and commerce. India, on the other hand, is located just a few hours away from the UAE, making it easy to transport goods and services between the two countries. This proximity has helped to facilitate trade between the two countries and has made the UAE an important market for Indian exports.
- Strong Cultural Ties:
India and the UAE have strong cultural ties, with a large number of Indians living and working in the UAE. This has helped to create a strong bond between the two countries and has facilitated trade between them. Many Indian companies have set up operations in the UAE to tap into the local market and to take advantage of the cultural similarities between the two countries. This has helped to create a strong demand for Indian goods and services in the UAE, making it an important export destination for India.
- Diversified Economy:
The UAE has a diversified economy with a strong focus on tourism, logistics, and financial services. This has created a large demand for goods and services from other countries, including India. India has been able to tap into this demand by exporting a wide range of products to the UAE, including textiles, engineering goods, chemicals, and pharmaceuticals. The UAE has also become an important market for Indian food products, with Indian spices and food items being very popular in the UAE.
- Free Trade Agreements:
The UAE has signed several free trade agreements (FTAs) with other countries, including India. These agreements have helped to create a more open and transparent trading environment, making it easier for Indian companies to do business in the UAE. The FTAs have also helped to reduce trade barriers and tariffs, making Indian exports more competitive in the UAE market.
The strong trade relationship between India and the UAE is built on a combination of geographical proximity, cultural ties, a diversified economy, and free trade agreements. The UAE is an important market for Indian exports and offers significant opportunities for Indian companies looking to expand their business in the Middle East. As the two countries continue to deepen their economic ties, it is likely that trade between them will continue to grow in the years ahead.