UAE/India debate: Trade and investment corridor booms

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The economic ties between the UAE and India have gone from strength to strength in recent years and are set to deepen further. The UAE not only offers India the promise of investment in its creaking infrastructure, but a compelling investment environment for Indian companies and a staging post for expansion. Conversely, Asia’s third largest economy offers Arab companies growth opportunities

UAE India debate
Executive summary
• Over $75 billion of trade between the UAE and India last year – the highest on record
• The Bilateral Investment Promotion and Protection Agreement between the UAE and India will boost trade and investment flows
• The UAE offers attractive business and investment opportunities and a staging post for regional expansion
• Indian firms have greater access to funding and liquidity in the UAE than domestically
• UAE banks, and companies, are expanding in India, while Indian banks are seeking licences in the UAE
 • The UAE regulatory framework supports business but needs improvement
• India’s government faces big challenges to make it an attractive destination for foreign investment
Euromoney How important is the UAE and India’s economic relationship for your company, and more broadly how important is this relationship for both countries?

Vimal Kejriwal (VK) president, transmission and distribution, KEC International.VK, KEC The UAE is a very important partner for us as a power, transmission and distribution company. We’ve been here for 20 years, having opened an office in Abu Dhabi in the early 1990s. Since then we have been here continuously, which is reasonably rare. Often you will find that companies come here, complete their projects and then walk away. But the fact that the UAE is a large country geographically, and has been growing continuously, fortunately means we have seen a continuous flow of projects coming to us as a result. Secondly, our presence in Abu Dhabi helps us to grow our business in other parts of the Middle East and North Africa, such as in Algeria, Libya and Tunisia, for example. And with the rules, regulations and taxation here in the UAE being supportive we have been able to establish a strong base for our business, using it as a regional hub for expansion. It also helps us to grow our operations globally.

Rajesh Somani (RS) managing director and CEO, Swiss Singapore Overseas Enterprises.RS, SSOE Our company is mainly engaged in bulk commodity trading and for us the economic relationship between the UAE and India is very important because the UAE and the Middle East, more broadly, is a major source of the business we do in petroleum and fertilizer products in particular. Some of clients we have here in the Middle East region include companies such as ADNOC, Saudi Aramco, Kuwait Petroleum and Qatar Petroleum, among others.


Further reading 
UAE India debate
Learn more about the participants
This part of the world is very important for our current operations and going forward this region is going to play an even greater role because of the growth we see in oil refining capacity, fertilizer capacity, and increasing demand for this from India, Asia and Africa. These two elements complement each other, and this is the reason why, after Singapore, we have to have a presence in Dubai.


Ram Chidambaram (RC) chief finance and accounts officer, Larsen & Toubro Ltd.RC, L&T Larsen recently launched a programme called India II, which is focused on making the UAE our main hub for our international operations. This underlines the significance that we attach to this part of the world. Indeed, we strongly believe there are great prospects for us here. The aim is to successfully replicate in the UAE what we have built as a business in India over the past 70 years. The taxation and governance in the UAE has made this plan straightforward and relatively easy.

However, there are problems here too. For example, decision making, especially among the national oil companies, can take some time, which can cause a bit of a problem. Other than that there aren’t many other major issues that we face here. The potential for us here is great and maintaining this the economic partnership between the UAE and India is very important for us.

Rasheed Mikati (RM) executive director, Arabian Construction Company.RM, ACC Unlike these other companies, which are Indian companies working in the Middle East, ACC is a Middle Eastern company – originally a Lebanese company – that has been operating in Abu Dhabi since the late 1960s (and the UAE since it became a federation in 1971). We are one of the largest contractors working in the GCC. We started working in India in 2011 after winning our first project in Mumbai in late 2010. However, while we see a lot of Indian companies coming and setting up in the UAE, we don’t see many companies from the UAE doing the same in India. It’s quite rare for that to happen and especially in the construction industry.

We started in India in 2011 but since then we have won a further three projects in India. So it’s going very well for us but as a foreign company working in India we do definitely find it very difficult as it takes a long time to get to know the market and we only have the confidence now, after three years of working there, to take on more work. In comparison, had this been a GCC country or another Middle Eastern country, we would have gone in a lot more aggressively. However, we have the confidence to grow now and have expanded from Mumbai to New Delhi and Calcutta.

Howard Gaunt (HG) executive vice-president, general manager of wholesale banking, Abu Dhabi Commercial Bank.HG, ADCB We have such a bullish view on the trade corridor between the GCC and more particularly the UAE, that we have a coverage vertical in ADCB that is called ILB – India Linked Business. The idea is that if we have an Arab company doing business in India, we will follow that company into India, and vice-versa – playing a supportive role in helping Indian companies come here to the UAE or GCC more broadly. There are many successful examples of Indian companies doing this, but there are also examples where it has gone less well.

There are challenges on both sides and often related to cultural differences. What we try and do though, is bring together specialist bankers who understand the unique cultural nuances and needs of companies that operate in this trade corridor. This strategy is paying off. We have managed to more than quadruple the amount of business we are doing in this important corridor in just a year and a half. That highlights just how much business is being done between these countries, and we’re convinced it’s also a strong sign of the growth to come.

Colin Fraser (CF) executive vice-president, group head of wholesale banking, Abu Dhabi Commercial Bank.CF, ADCB Look at the interconnectivity between India and the UAE and wider GCC, and you can see how deep the connection is. I think the Indian population here have certainly helped build the country very substantially to where it is today and both in terms of their expertise – especially in engineering – and indeed with their physical manpower. In addition, if you look at the domestic UAE business community that connection is just as deep. If I look at our SME customer base I would estimate at least 50% of all the SMEs we deal with are owned and managed by people from India, and a very significant proportion of those working for SMEs are people from India too. For large corporates here too the proportion of Indian professionals working for these companies is just as significant. The linkage between the UAE and India is extremely deep and if you look at the UAE SME community, many of these companies are planning to expand into other GCC countries and indeed in India.

The move to India may not happen physically but certainly is happening in trade and we see a huge amount of that happening today. And it’s not just the same products and materials, it’s amazing just how diversified and granular those trade flows are between the UAE and India. I think that that can only continue and for Indian companies looking to and operating here they see a vibrant market, a significant amount of wealth and economic activity and a huge amount of government-sponsored development and particularly in infrastructure.

When we look at UAE companies going into India however, there have been some challenges for them and for other foreign companies. What’s been happening with Vodafone and Etisalat in India has no doubt made some multinational companies pause for thought. In India execution risk is high and you have got to know what you’re doing. The prize of course is an enormous market that is growing and holds massive potential. What will be interesting is just how the new government can help accelerate and facilitate that.

Murali Subramanian (MS) executive vice-president, head of transaction banking group, Abu Dhabi Commercial Bank.MS, ADCB The UAE has a unique position in working with large economies, whether that is India, China, Russia or Europe. But with India especially, the trade corridor with the UAE is deep and last year there was some $75 billion of trade between the countries. There is also about $50 billion of Indian investment in the UAE and around $8 billion of UAE investment in India. There are two themes that underline why this trade corridor is so important. The first is the investment climate and the trade facilitation ability that the UAE offers Indian companies.

In India there is a slew of regulatory constraints, such as the availability of the foreign exchange, and onerous compliance procedures, and the UAE offers a convenient way out from this. Second, the UAE offers Indian companies, and other foreign companies, an excellent environment for shared treasury and shared service centres, and it’s no coincidence that Jafza and the DIFC play host to a number of shared service centres. Halliburton, for example, runs half of its global operations out of Dubai. In sum, more than any other geography, the UAE and India have a very strong relationship and there’s a lot of strategic dialogue and discussion happening between them at the highest level. Certainly the treasury and trade theme between India, its corporate sector, and the UAE is very strong and can only keep expanding.

Euromoney There are a number of incentives for businesses operating in the UAE. Which for you are key? And what are some of the main challenges?

Howard Gaunt (HG) executive vice-president, general manager of wholesale banking, Abu Dhabi Commercial Bank.

HG, ADCB The top reason has got to be that there is great wealth here and it is actively looking to be deployed. It’s a nice problem to have but it’s a big problem. We have spent a fair amount of time with the Emirati sovereign and one of their biggest challenges is how to deploy this treasure trove of cash. There are many projects here that require investment, and infrastructure in particular. This is a young country and while the infrastructure is strong it still has a long way to go.

In addition to that, I do think that while the regulatory environment is broadly supportive, it still needs much improvement. If you look at some of the surveys conducted on ease of business in the Middle East and GCC, the UAE barely makes it into the top 10 or 20 countries. That’s got to change. Also, and from a client’s perspective, there are too many banks. There are 50-55 banks all chasing the same clients. That’s good competition but it’s probably too intense. For Indian and other international companies it does mean that they can find bank funding here in the UAE more easily than they can in their home market.

Rajesh Somani (RS) managing director and CEO, Swiss Singapore Overseas Enterprises.

RS, SSOE Two of the key benefits of Dubai and the UAE for us are the geographical location and central time zone. In addition, that Emirates and Etihad airlines fly to all the major cities of the world is a great help to us because we have offices in 14 countries, and so with the geographical location and direct flights to many of those countries where we operate, the UAE is well positioned. So for a global trading company that is one of the biggest advantages because it means we can move from here to there easily.

Also, operating in the different time zone here is advantageous for us in being able to connect and communicate between businesses. The absence of complex laws here also provides any company with an opportunity to do the simple things in business well. In other countries, by comparison, we have to invest huge energy in ensuring we comply with all the laws. In this part of the world they make it such more possible and easier to do straightforward, viable business.

On top of that, the infrastructure you can find here is some of the best anywhere in the world, whether that is the conference facilities, the communication networks, transportation links and hotels. This makes a huge difference for any business. In this part of the world you can find the best of the east and the west. The leadership here also has a vision to make this country the best in the world, which makes a massive difference. India has all the basic ingredients in place for fast-paced growth and development but the country has lacked strong, single-party leadership for more than three decades. With the new government now in place in India this could, we hope, change.

Ram Chidambaram (RC) chief finance and accounts officer, Larsen & Toubro Ltd.

RC, L&TWe are operating here as a kind of foreign branch. In other countries where we a operate there may be complications with setting up an LLC, but here setting up a foreign branch is made relatively easy for us, and obtaining a trade licence is pretty straightforward too. In addition to that the prospects here are, in our assessment, enormous and continue to grow and the infrastructure in the UAE is also supportive to our business. Other than that, this is a tax haven, which of course is very beneficial. We do have plans to expand in the UAE and replicate the success of our business in India here and under our India II programme. But it’s not just in the UAE, we also plan to expand our international operations in Africa and the Far East, all of which will be orchestrated from our hub in Abu Dhabi. 

Vimal Kejriwal (VK) president, transmission and distribution, KEC International.

VK, KEC Unlike other companies, we are here in the UAE primarily because we have business directly with the UAE. We have a huge amount of business with Adwea and Transco. All other reasons – business friendly policies, tax, infrastructure – are incidental. The regional and global connectivity that Abu Dhabi and the UAE offer is important, but in addition to that the ports and logistics are critical too. For example, today we are engaged in two large projects in Tanzania and every single piece of construction equipment we need for this is purchased and sent from Sharjah. It is one of the largest markets for construction equipment.

"When I go back to our Indian banks looking for facilities from them for our business in Saudi, most of them have significant limitations on the level of capital they can lend"

Vimal Kejriwal, KEC International

Furthermore, the availability of bank funding is also very important. We can go to London and the US for funding but that can be difficult. Therefore it can be easier and more cost effective to secure funding locally here in the UAE. The UAE is also better for us compared to other GCC countries. Why? I’ll give you an example – Ramadan. We held back from sending roughly 100 containers to Saudi Arabia from India because we were not sure how long they would be stuck at the ports in Saudi. So the fact that there are logistic and infrastructure challenges like that is very different to what we have here in the UAE. We have regular sailings from India to the UAE, and I have full certainty that whatever I send will arrive in my yard in UAE in seven days’ time. That certainty is very important. Also important is transparency in payments. Here I do not have to worry about any of that. In other countries in the Middle East, there is always a lingering fear. Will the politics change? Will something happen? Am I safe working there? Will I get through immigration quickly or not? In some countries I have personally been stuck in immigration for three or four hours. All these things taken together have an impact.

Euromoney By comparison, as an Arab company expanding its operations in India, what’s your experience so far?

Rasheed Mikati (RM) executive director, Arabian Construction Company.

RM, ACCThis part of the world can be a bit too easy to operate in and one of the challenges we have with our Indian resources is that if you want to send Indian staff to India nobody really wants to go back. Life here is very comfortable. Compared to Mumbai, life and business is far easier over here in Abu Dhabi.

Nonetheless, there are a few reasons why we have chosen to move into India. First, we already have successful operations in most of the GCC countries. But to maintain our growth we were looking for a new market and for an Arab company India was an attractive opportunity. We saw that in India particularly there was demand for what we do – high-rise buildings. In addition to that, it’s English-speaking, it’s pretty easy to set up the paperwork – while bureaucratic and it takes a long time, it does get done – it’s also stable, a large market and sustainable. On the other hand, having regional headquarters in the UAE is by far the easiest place for us. When it comes to bringing resources in, in terms of visas, we find many more challenges in other countries than we do in the UAE. In terms of connectivity it is easy for us too, and for us our headquarters here acts as a knowledge hub where a lot of thinking and strategy happens. We then export this to other countries where we have operations on the ground.  Every time there is a construction challenge in countries where we are, such as India, Egypt and Qatar, the team can call someone in Abu Dhabi for advice and guidance.

Euromoney Turning then to India, what are some of the main issues Indian companies face in the Indian banking sector? And how does that compare with the UAE?

Colin Fraser (CF) executive vice-president, group head of wholesale banking, Abu Dhabi Commercial Bank.

CF, ADCB There are some challenges in the domestic Indian banking market – particularly around being able to provide sufficient liquidity across industries – that makes it more beneficial for them to be here in the UAE. It’s broadly fine if you are a Larsen & Toubro, KEC or Birla Group because these are top echelon companies and are therefore well looked after. But the Indian banking system is very tightly controlled by the regulator, the RBI. As a banker, I do think the RBI has contributed significantly to preventing the Indian financial system and economy having an absolute nightmare of a time through the credit crisis, which is admirable because the contagion could have been very severe. But the way that the liquidity rules work restricts the size of asset registers and lending books, which means the banks then have to have a significant amount of bank balance sheets that have to be parked in cash and government securities. Then we have a significant proportion of foreign and domestic bank balance sheets that are directed into specific parts of the economy, such as housing, small-scale industry, agriculture and exports.

What this means for foreign banks is that only 40% of their book is available to do with entirely what they want – which amounts to a significant restriction in credit.

On top of that, the situation in India is one where the economy has slowed down considerably under the last government, and as a result we have seen a big impact on those industrial groups there with significant leverage.

The top 10 industrial groups in India, for example, have $100 billion of debt. The top 100 have $200 billion of debt, which is a lot of money on anyone’s book. And if we look at the published NPLs for the state banks, they are the thick end of 5% today and if you were to look at restructurings and extensions and kicking the can down the road, it’s double that or more. This all places a significant amount of pressure on the banking system.

Vimal Kejriwal (VK) president, transmission and distribution, KEC International.

VK, KEC As I see it, the issue is not one of liquidity in India, it is a cost and country limit issue, and particularly for a company such as ours, which operates in many different countries throughout the world. Our Saudi order book is bigger than my Indian order book. So what’s happening is that when I go back to our Indian banks looking for facilities from them for our business in Saudi, most of them have significant limitations on the level of capital they can lend.

Our company is 60%-70% international, so there is a need for accessing the UAE banking sector, where they may or may not have such limits, or where the limits they have for other Middle Eastern and GCC countries are significantly higher than what we can find in India. That’s when the UAE becomes critical for companies like us.

Euromoney And as a foreign bank looking to expand its operations in India, what is ADCB’s experience there?

Colin Fraser (CF) executive vice-president, group head of wholesale banking, Abu Dhabi Commercial Bank.

CF, ADCB Longevity really helps because it is a complex country and as much as I genuinely admire the RBI they do control the banking system through a highly complex set of regulations, and it is very challenging to keep up. Suffice to say it is an extremely complicated regulatory environment. We have to send 200 separate financial reports to the RBI on a daily, weekly, monthly and quarterly basis. We employ three people just to do that work. Now, some UAE banks have become more aggressive about pursuing business in India in recent years, and that can only be a good thing for expanding the Indo-Gulf trade and investment corridor. But if a Middle Eastern bank wants to operate on the ground in India they will have to write a big cheque in the form of capital.

We generally find that for large Indian corporates that are creditworthy and cross-border, they won’t even open a discussion with you unless you’re willing to lend $20 million-$25 million in a single ticket. Now we can only lend 15% of the capital of our Indian operations to any single obligor. We are a $50 billion balance sheet bank, so if we are, say, investing a couple of hundred million dollars in capital it’s a meaningful number. So we have a desire to do more in India but it is a multidimensional puzzle we have to solve there. In order to be comfortable we are going to be doing the right thing in terms of the credit risk we take and the capital we ultimately deploy on the ground.

One of the main challenges for financial institutions that have a burning need to put long-term money to work, is how do they tap the opportunity that India represents in a way that is as low risk as possible. Between the strong domestic banks here and in India there is an opportunity to work together to deliver that. Between us I think we can work together to channel needed investment in India, where there are decent returns and good quality sponsors. India has a very substantial need for this type of investment. We need to find new ways of doing this because under Basel III this will likely make it more difficult and expensive for banks to lend there.

Euromoney What about banking in the UAE?

Rajesh Somani (RS) managing director and CEO, Swiss Singapore Overseas Enterprises.

RS, SSOE For us, in this part of the world, the one area where we really want to see improvement is bank financing. This part of the world is lagging behind Singapore in banking and the facilities available there, while the cost is much less than here, and if you need project or industrial finance here it is very costly. If there can be improvements in financing, this will help accelerate bilateral trade, and make the UAE more attractive for all international companies.

"If there can be improvements in financing, this will help accelerate bilateral trade, and make the UAE more attractive for all international companies"

Rajesh Somani, SSOE

Ram Chidambaram (RC) chief finance and accounts officer, Larsen & Toubro Ltd.

RC, L&T There are regulatory costs in India but here too the banks are having to comply with Basel III, so the question is how will this affect the pricing structure here and how soon will we see that?

Colin Fraser (CF) executive vice-president, group head of wholesale banking, Abu Dhabi Commercial Bank.

CF, ADCB As far as liquidity here in the UAE is concerned, the banking system is awash with cash – we’re absolutely catching the tailwinds of QE. Secondly, base interest rates are extremely low, which is difficult for banking profitability because where we make money on operating cash balances we’re reliant on a reasonably high rate to make that worthwhile. The way Basel III is potentially looking to treat operational cash balances is very problematic because it would take around 50% of that off the table as an eligible funding source for liquidity planning purposes.

So for banks that are good cash managers and good transaction banks, instead of actually benefitting from that flow of service that you provide clients, you’re arguably going to be penalized. In sum, I don’t think we are going to see bank-lending spreads doubling or tripling from where they are today, but credit risk will have to be more correctly priced than it is at present.

Murali Subramanian (MS) executive vice-president, head of transaction banking group, Abu Dhabi Commercial Bank.

MS, ADCBUnder Basel III, from a funding and capitalization point of view, the good news is that we/the UAE banking sector are well capitalized so there is not going to be a capital induction shock like there will be in other countries, and especially in India. On the liquidity – cash on balances – front as well, the belief is that while the BIS guidelines are being passed on and implemented by the central bank there is some hope that the UAE regulator will have a dialogue in the interest of keeping this operating business community as successful as it is today. Because if they just literally implement the rules as prescribed by the BIS, chances are lending will immediately come under pressure.

The financial infrastructure of this country has not kept pace with the spectacular development otherwise evident. As an example, no single bank here can take Yemen risk in the amount of capex that is required, so we all turn to insurance to complete transactions. In the context of Basel III, it is the expectation that the central bank here will be sensitive to the competitive advantage of the UAE diminishing. So there will be some push back and Basel III is nothing if not political and we expect there to perhaps be more redefining before we know exactly where we stand with regards to cost and liquidity.

Euromoney Moving into the treasury side of this, how are large Indian corporates’ treasury operations set up, and what benefits are there for them and other companies setting up treasury operations in the UAE?

Murali Subramanian (MS) executive vice-president, head of transaction banking group, Abu Dhabi Commercial Bank.

MS, ADCB Large Indian corporates that are chasing legitimate expansion within India tend to focus on building shared service centres or lookalikes within India itself and in one of the big cities. Their primary focus tends to be regulatory and tactical balance sheet management and the operational aspects of their function, such as centralizing process flows, are less of a focus, but that changes as soon as there is global expansion involved. There then needs to be more of a focus on streamlining operations.

We have seen a lot of receptivity from our Indian corporate clients that have moved to the UAE, or indeed other parts of the world, such as Singapore, to setting up shared service centres that can take on the documentary and payments operations to start with and eventually other aspects of operations. This frees up treasury to do its real role, which is risk management and franchise management. Of course the regulatory piece must stay in India but for the international operations I think it is quite a good fit for these companies to move to the UAE and set up shared treasury centres.

This is, of course, by no means unique to Indian companies because large US and European companies have long had shared treasury, operation and service centres here. There is a lot of expertise and professionals here that have helped companies such as Halliburton, Nestlé and Unilever, among others, set up here. So this is an environment that is rich in terms of its capability and connectivity to support treasury operations for any large international company.

Ram Chidambaram (RC) chief finance and accounts officer, Larsen & Toubro Ltd.

RC, L&T Our treasury operations are centralized in India. Recently I brought over our treasury team from India to meet all the bankers we work with here. What came from that was a need for UAE banks to improve their cash management and treasury operation systems here. We have large projects over here and with our India II programme, we need support here on this. I very strongly believe that everything cannot be centralized. There are also a lot of RBI regulatory requirements around moving funds in and out of India. There are even times when moving only a few million dollars out of India is very tough because whenever there is heavy volatility in the Rupee, blanket rules to prevent the flow of money in and out are put in place.

Rajesh Somani (RS) managing director and CEO, Swiss Singapore Overseas Enterprises.

RS, SSOE For us, there is hardly any scope to have a treasury operation in the UAE. Having fixed deposits is perhaps the one exception. For most of the companies operating here, their treasury centres are either in Singapore, India or in London. Here in the UAE there is a total absence of a liquid bond market, liquidity in other instruments, as well as investment options for companies looking to park their money. This is one of the main areas where local banks can help do something to change and support the treasury function.

Colin Fraser (CF) executive vice-president, group head of wholesale banking, Abu Dhabi Commercial Bank.

CF, ADCB In general terms, when we talk about the domestic banking system and regional banking system, I think the sophistication point is pretty fair feedback. In terms of investing surplus liquidity in a domestic fixed income market, or something like that, we simply don’t have a domestic bond market, which makes delivering that kind of liquidity management solution more difficult. There are some banks here that are attempting to improve their transaction banking or services business infrastructure, and particularly in payments and collections as opposed to enabling the investment of surplus funds domestically.

As a bank we have spent a lot of time building a powerful cash management capability. Obviously when we are talking about investing surplus dirham liquidity into fixed income we can only synthetically create that. But for companies that want to operate treasury service centres, operations in the UAE, of which there are many, we have seen a definite opportunity in the market to develop that capability. And ADCB has a large and substantial number of corporates, both large and small, who have moved their cash management business to us.

Vimal Kejriwal (VK) president, transmission and distribution, KEC International.

VK, KEC We are quite happy with the level of understanding of the local banks in respect to the projects we have and what needs we have to get them done. On treasury specifically, our treasury operations are centralized in India, but one challenge is that the interest rate differentials between India and the UAE are so high. The moment you see some surpluses in the UAE, we would want to send that back to India because you will save so much more by doing that. In addition to that there are RBI regulations, which prevent us from having too much of our treasury operations outside of India.

Euromoney Recently the UAE and India signed a Bippa [Bilateral Investment Promotion and Protection Agreement]. Is this supportive of your business, and could it accelerate trade and investment flows between both countries?

Rajesh Somani (RS) managing director and CEO, Swiss Singapore Overseas Enterprises.

RS, SSOE This treaty has been heavily loaded to address the income tax side of the relationship, instead of increasing the amount of actual business done between them. Going by what’s happened in India over the past couple years to companies such as Vodafone and Etisalat, I think if the treaty can address a few more major points it could potentially be a big facilitator of trade, business and investment between the countries.

One of those points is having a central agency ensuring any company investing in either country complies fully with the local laws and regulations. That could be very supportive to both sides. Secondly, addressing application of the law retrospectively.

The Vodafone case is a big concern outside of India. This is a negative event for foreign investors. So if in this treaty a change can be made that states no law can be applied retrospectively, that would be good. Third, any treaty needs to address how foreign investors can invest directly in the stock of good Indian companies without having to go through a mutual fund, as it currently stands.

Vimal Kejriwal (VK) president, transmission and distribution, KEC International.

VK, KEC To me, it is significant for two reasons. The first is that the Indian government has announced that it is reviewing all the Bippa agreements and they are actually putting on hold all other Bippas for the past year. In fact the UAE Bippa is probably the first signed in the past couple of years.

Secondly, if you look at India’s requirement for funding of infrastructure – power, roads, ports, etc – the projection is India will require almost $1 trillion in the coming years. So for an industry like ours where foreign capital is required this could represent a significant opening. We’ve not seen a significant investment from the UAE into the power sector in India, and that could change as a result of this Bippa.

Colin Fraser (CF) executive vice-president, group head of wholesale banking, Abu Dhabi Commercial Bank.

CF, ADCB I very much echo the views of others. While agreements like this set out a good framework, it comes down to knowing exactly what business is ultimately being conducted between individual institutions and the people inside them. And I think the recent banking lesson from all over the world is that you always have to choose your partners well and you have to do your homework. I also think there is something to be said about how you structure investment partnerships to ensure you mitigate risk.

Broadly speaking I do think the treaty is a force for good but it really comes down to is what the actual opportunities look like in India. You can have all the frameworks you like but if people from this part of the world do not find India an attractive place to invest, they are simply not going to invest. It comes down to the overall risk, the overall return and on a portfolio basis what is available to them.

India is competing for investment dollars that it really needs. My hope is that this new government does everything that it can to make the country as attractive as it possibly can be to attract foreign investment in the volume that is required.