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GCC-India free trade pact to be signed in '07

posted on 08/12/2006: 738 views


India expects to sign a free trade agreement with the Gulf Cooperation Council (GCC) by the end of 2007, Indian Minister of Commerce and Industry Kamal Nath said yesterday.



A ministerial meeting will be held in March or April to discuss details of the proposed pact.



"I think we should try and have it by the end of 2007. That's what we are targeting," Nath told reporters.



India wants to expand its links with the GCC to attract more Arab investment, especially in infrastructure projects.



Nath said India needs to spend $400 billion in the next five years on building infrastructure to keep pace with a fast-growing economy. "There is very little investment in India's urban infrastructure even to sustain our levels of growth now," he said.



The country is keen to attract foreign investment in the port, energy, railway and construction sectors.



"I think we should easily be able to secure $2 billion additional investment in the next three years from the GCC," Nath said, admitting, however, that it was "a drop in the ocean".



The minister said Dubai real estate developer Emaar has so far invested $600 million in its Indian projects.



Several UAE-based investors have also shown interest in developing clusters for the media, electronics and health businesses.



Indian officials see renewed Gulf interest in India as "a quantum jump" from the earlier scepticism about the notoriously complicated Indian bureaucracy that kept Arab investors away from the country.



"There is a mindset of the past that India is difficult to invest in. So the message of economic reform and liberalisation [in India] has not yet fully been comprehended by the GCC countries. We look forward to forging closer ties with the Arab region," Nath said.



With the GCC flush with cash due to higher oil incomes, India is stepping up its efforts to woo Arab investors.



"For the wealth here, the parking lot was the West. That parking lot is changing, and it has to change. There are more attractive and more secure [destinations] in Asia. India is Asia's fastest growing free market economy," said Nath, who was in Dubai to participate in the annual India-Arab World CEO Summit.



India expects 30 per cent annual growth in its non-oil trade with the GCC, which supplies 60 per cent of India's energy imports.



The UAE is India's biggest regional trading partner, with bilateral trade from April 2005 to March 2006 valued at $12.9 billion. Of this Indian exports were worth $8.6 billion.



R. Seshasayee, president of the Confederation of Indian Industry (CII), said Indian companies also see the UAE as a manufacturing hub for the rest of the Arab region. "That is just one of the attractions. The UAE's own economic diversification creates a synergy in this regard," he said.

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