On 15th August 2019, days after being voted to power for a second term in the largest democracy of the world, Indian Prime Minister Narendra Modi set forth a mammoth target – turning India into a $5-trillion economy.

Addressing the nation on 73rd Independence Day from the ramparts of the iconic Red Fort in national capital New Delhi, Modi painted a picture of how India will become $5 trillion economy by 2024, crafting hopes amid an economic downturn and a simmering bank crisis. “Everyone is a stakeholder in this country,” he said.

The $5 Trillion-Economy Chase 

The Indian economy, currently at $2.8 trillion, entered 2019 as the world’s sixth-largest economy, and was poised to take over the fifth position. However, it slipped to seventh place within months.

Read: India aims to be a US$5trillion economy with help of ‘valuable partner’ UAE- Modi

As India chases the target of becoming a $5-trillion economy in the next five years, the UAE is expected to play a crucial role in this ambition, given the new momentum in the India-UAE relationship.

Later that month, the Prime Minister visited the United Arab Emirates, seeking to strengthen ties and make the UAE a partner in its $5-trillion economic goal.

“Target of making India a $5-trillion economy is completely doable,” said Piyush Goyal, the Indian minister of commerce and industry, and railways, who also held the finance portfolio briefly.

A month later, Goyal went to the UAE seeking foreign direct investment (FDI) in several sectors. At the High-Level Task Force meet co-chaired by Goyal and Sheikh Hamed bin Zayed Al Nahyan, the Managing Director of Abu Dhabi Investment Authority (ADIA), the two countries reportedly chalked a comprehensive strategic partnership facilitating investments and bilateral trade.

The UAE Factor

The UAE has long been a valuable partner to India in trade and the figure has touched $60 billion. The commercial relations between the two nations are anchored by energy cooperation, trade, investments by UAE in India and businesses driven by Indian expatriates in UAE. In the energy sector, UAE accounts for eight percent of India’s oil imports and is the fifth largest supplier of crude oil to India.

With the country’s strategic shift to non-oil business, more trade with India and more investments are in the pipeline.

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Cumulative foreign direct investment (FDI) equity flows from UAE into India reached nearly $900 million in 2018-2019.

Over the last one year, 17 UAE firms have confirmed their investment in India’s infrastructure sector. India has also been assisting more than 200 UAE-based companies to obtain licenses and approvals. The country will also invest up to $2 billion in contract farming, sourcing of agro commodities and related infrastructure.

Emirati companies also plan to invest up to $7 billion (25 billion AED) in India’s food sector by 2022. Nearly $5 billion investment will be directed to mega food parks and similar facilities in across various Indian cities. The proposed food parks are expected to come up in Gujarat’s Kutch, Maharashtra’s Aurangabad and Madhya Pradesh’s Pawarkheda. The initiative is expected to create over 200,000 jobs.

India’s National Investment & Infrastructure Fund, which is looking to raise equity funds for the country’s massive infrastructure sector, is set to receive to $ 1 billion investment from Abu Dhabi Investment Authority (ADIA).

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UAE investors are also looking at the Indian startup ecosystem with a special focus in agri-tech, logistics, manufacturing, healthcare, education, research and development, IT and tech, turnkey solutions, artificial intelligence and analytics. Dubai Startup Hub has nearly 3,000 startups – 30 per cent of which are run by Indians.

Several top Emirate firms are also active in India. These include Emaar, DP World, Abu Dhabi National Petroleum Construction Company, Abu Dhabi National Energy Company, Drake and Scull International.

Prominent private and public sector Indian companies and banks are also operating in the UAE. Major Indian companies such as L&T, Dodsal, Punj Lloyd, Engineers India Ltd., TCIL have been able to obtain significant number of contracts in UAE, according to India’s Minister of External Affairs.

One of the other drivers of investment from UAE is likely to be individual Indian states that are trying hard to woo foreign investors by easing rules to do business. The list is long — Madhya Pradesh, Punjab, Himachal Pradesh, Telangana and Andhra Pradesh.

Global investment firm Dubai Holdings has also helped set up a Smart City in Kochi in the state of Kerala and is said to be looking to help develop more projects in other states.

Read: Dubai FDI boosts economic & investment ties with India

On the other hand, data released by Dubai Land Development Department indicated that Indians were the largest foreign investors in Dubai real estate with investment of AED 20.4 billion in 2016-17 (around $5.5 billion and 13% of the total).

Given this atmosphere of mutual cooperation, the UAE will continue to be one of the key contributors in the growth of Indian economy.