GCC-India corridor offers huge investment opportunities, says report

Muscat: A new research report outlines the robust economic cooperation between the Gulf Cooperation Council (GCC) and India and analyses the trend in investment flows and the strategic government initiatives to further strengthen ties.
It also assesses the competitiveness of countries in terms of ease of doing business and further identifies and discusses the potential sectors for cooperation and investment in both the regions.
The report entitled, “GCC-India corridor—Investment opportunities and challenges,” also details the main investment drivers and challenges and profiles some of the prominent companies in the regions. The report has been prepared by Alpen Capital, an investment banking advisory firm.
“The GCC nations and India are strengthening historic ties across cultural, trade, economic, defence and political areas. Relations between the two regions are maturing beyond trade, as they realise the potential of strategic cooperation and growth.” Rohit Walia, executive chairman, Alpen Capital (ME) Limited, said.
“Though bilateral trade continues to dominate the multi-billion dollar relationship, we see that investment flows are rising rapidly, as the regions recognise that the GCC-India corridor presents immense opportunities for investors,” he added.
While GCC governments are continuously reforming policies to create an environment conducive for investment by foreign entities, India, on the other hand, as a fast growing and emerging economy, is in the process of upgrading infrastructure, creating a digitally empowered society, increasing local manufacturing and enhancing energy production. Such initiatives from both regions will create increased investment opportunities and further strengthen relations between GCC and India, he further added.
“Acknowledging the growth potential that exists between the GCC and India, the two regions have held leadership level visits and talks in the recent years to explore new areas of cooperation. India’s share of the total investments into the GCC increased from 4.7 per cent in 2011 to 16.2 per cent in 2016, while GCC investments into India also continued to rise from 0.7 per cent in 2011 to 2.95 per cent in 2016,” said Sanjay Bhatia, managing director, Alpen Capital (ME) Limited.
Sectors, such as oil and gas, food processing, healthcare, education and infrastructure, seem to be the top picks for investors looking towards GCC as an investment destination. In India, sectors, such as infrastructure, ICT, food processing, and healthcare prove to be more attractive as investment opportunities for GCC companies. We are likely to see an increase in the flow of investments between the regions the improving ties and regulatory environment,” he added.
The GCC nations have been able to self-fund their economic development through the wealth accumulated from the export of oil and gas. Nonetheless, foreign investments have remained imperative in diversifying the revenue base, strengthening technological capabilities, improving export competitiveness and creating employment opportunities.
In contrast to the overall decline in total foreign direct investment (FDI) into the GCC, investments from India grew at a compound average growth rate (CAGR) of 15.9 per cent from $1.4 billion in 2011 to $2.9 billion in 2016. During the period, India’s share of the total investments into the GCC increased substantially from 4.7 per cent to 16.2 per cent.
Nearly 85 per cent of the Indian investments into the GCC were in the UAE, with India regarded as the third largest investor in the Emirates after the United Kingdom and the United States.
The GCC region offers a conducive environment for business with least demanding tax structure, low-cost electricity and natural gas, strong transport connectivity and investor-friendly free trade zones (FTZs) and Special Economic Zones (SEZs).
Due to their strategic location between the East and West, the GCC nations are seen as a gateway to the markets of wider Middle East and CIS countries. Subsequently, the UAE and Oman have developed themselves as re-export hubs and their potential is increasing with growing cross-border trade.
With an average GDP per capita (in PPP terms) of $61,559, most of the GCC nations rank amongst the top 10 richest countries in the world. Although the prevailing economic slowdown is affecting spending power of the consumers, the situation is likely to improve in the long-term with intensifying revenue diversification measures.