India biggest Mena trading destination by 2030
Dubai, October 13, 2013
India, which remains among the top five trading corridors for the UAE, Egypt and Saudi Arabia, is all set to become the top export destination for the Middle East and North African countries by 2030, said a report.
With its huge population, rapidly growing middle class and capabilities in industrial and post-industrial sectors, India is a market with considerable potential, according to HSBC's latest Trade Forecast report.
By 2030, the country will be the UAE's top export destination accounting for 14 per cent of exports, and Saudi Arabia's second largest export destination accounting for 18.5 per cent of exports.
The HSBC report stated that India was already Egypt's number one export destination and would maintain that position through to 2030, accounting for 15.4 per cent of exports.
"India and the Mena nations have been trading for many centuries and the opportunities certainly remain strong today. It's no surprise that India is a top five trading partner with each nation in the Mena group," remarked Tim Reid, the regional head of Commercial Banking of HSBC Mena said.
Reid was speaking at HSBC's Mena-India Conference held yesterday in Dubai.
"The prospect of Expo 2020 in Dubai and other infrastructure projects in the region offer excellent opportunities for Mena businesses to bring the chance to benefit from India's know-how into the region with new partnerships. India's strength in industrial and information technology can also help the businesses support the region's political programme of economic diversification," Reid added.
The HSBC Trade Forecast predicts that globally by 2020, India will overtake the US to import the highest share of goods for infrastructure as it invests in building its domestic networks.
According to India's Ministry of Commerce and Industry earlier this year, the country requires approximately $1 trillion worth of infrastructure investment by 2018.
In the UAE, as the country continues to diversify away from mineral manufactures and invest heavily in its infrastructure; growth in imports of goods for infrastructure and investment equipment from India will significantly outstrip growth in other imports during 2013-30.
The country has also pledged $2 billion of investments in Indian infrastructure earlier this year, said the report.
The UAE is India's largest export market, accounting for just over 10 per cent of total merchandise exports. The emirates is forecast to maintain this preeminent position out to 2030 due to robust demand growth.
Important Indian exports to the UAE include gems and jewellery; electronic goods, fabrics, machinery and equipment. India also uses the UAE as a gateway to other markets in the region, with many Indian exports transshipped from the UAE onto other countries in the Gulf, South-East Asia and East Africa.
On the Saudi trade, the HSBC report said in 2012, approximately 25 per cent of Saudi Arabian exports to India were oil & gas. Diversification means that the biggest growth in exports to India will be in chemicals, which will account for over 80 per cent of total exports from Saudi to India between 2013 and 2030.
There will also be strong growth in exports of infrastructure goods as India focuses on increasing its infrastructure spending and boosting growth potential, as seen in its latest Economic Plan.
India's exports to Saudi were just 2.9 per cent of total exports in 2012. This share is expected to increase to four per cent by 2030, ranking it India's fourth largest export destination.
The main contributors to this increase will be in the sectors of manufacturing, machinery and transport, and chemicals. Saudi Arabia's commitment to industrialisation and diversification will also offer opportunities to Indian investors.
According to HSBC, India was Egypt's second biggest export market after the US with nine per cent of all exports in 2012.
Egypt's less developed economy and industrial base means it has less scope to benefit from India's fast-growing economy and demand for a rapid modernisation in its infrastructure, said the bank in its forecast.
Nevertheless, investment equipment exports to India are forecast to grow at a double-digit annual rate in the years to 2030. Fastest-growing export sectors will be manufactures, chemicals and mineral fuels, which together will account for some 85 per cent of the increase in exports from Egypt to India between 2013 and 2030, it stated.
India will represent one of the fastest growing import sources for Egypt between 2013 and 2030. The biggest contributors to the increase will be machinery & transport equipment and manufactures, together accounting for over 70 per cent of this increase.
India's strengthening economy will also drive double-digit annual growth in its exports of infrastructure goods to Egypt, it added.-TradeArabia News Service