Success of International Corporate Entities: Middle East 4

……………………………………………………………………………………………………………………………………………...........................

1. RELATIONSHIP BETWEEN INDIA AND THE MIDDLE EAST India and Middle Eastern countries have a long history of amicable relations. India has pursued its strategic interests, primarily energy, with countries in the Middle East. The exchange of high-level visits across countries has strengthened bilateral ties between India and the Middle East. The last decade witnessed increasing numbers of visits by Indian officials to Egypt, Jordan, UAE, Israel and also Palestine. These initiatives were reciprocated through India visits by the leaders and high-ranking officials from the Middle East. Over the years, India’s focus has been to maintain relations with the UAE. UAE has emerged as the largest trading and investing partner from the region for India. India has signed various agreements with the UAE, which are focussed on business, culture, employment, civil aviation and enhancing people-to-people interactions.

Figure 1 Visits by dignitaries between India and Middle East (April 2012 to May 2013)

Source: Ministry of External Affairs, Aranca Research

1.1 Bilateral trade on a growth trajectory

India’s need for energy and the demand for Indian goods in Middle Eastern countries have put bilateral trade on a growth trajectory. Bilateral collaborations and alliances have provided a further impetus. Bilateral trade between India and Middle East grew 29.3 per cent y-o-y to USD202.9 billion in FY12. The outlook for trade remains bright; a 34 per cent growth in the India-Middle East trade corridor is expected in 2013. Exports from India are comparatively more diversified than imports into the country from the region. Imports are dominated by oil, as India imports around 75 per cent of its annual consumption from the region. The major export products include agricultural products, gems and jewellery, iron, steel and copper products, cereals, chemicals and engineering equipment. Exports from India contributed 30.0 per cent share – USD60.9 billion – of the total bilateral trade in FY12. Exports from India increased at a

April 2012

India's External Affairs Minister

visits UAE

Emir of Qatar visits India

May 2012

Foreign Affairs Minister of Iran

visits India

Foreign Minister of UAE visits

India

June 2012

Prince of Bahrain visits

India

September 2012

President of

Palestine visits India

March 2013

President of Egypt visits India

Minster of Al-Diwan Al-Amiri Affairs of the State of Kuwait

visits India

Special Envoy of the Syrian President to India

May 2013

India's External Affairs Minister

visits Saudi Arabia

Iran's External Affairs Minister

visits India

Success of International Corporate Entities: Middle East 5

……………………………………………………………………………………………………………………………………………........................... CAGR of 18.5 per cent, only slightly below imports, which registered a CAGR of 19.2 per cent over FY08–12. The GCC countries accounted for more than three-fourths of the cumulative exports during FY08–12. Exports to the GCC region increased at a CAGR of 20.2 per cent over FY08–12 to reach USD45.4 billion. Of all countries in the region, the UAE has been the largest export destination for India – accounting for 59.0 per cent of the total exports to the Middle East. Notably, in 2012, UAE emerged as the biggest export market for India globally, surpassing the US, China and Singapore. Saudi Arabia is the second biggest contributor, with 9.3 per cent share in exports to the region.

Figure 2 Trade (USD bn) with ME grew significantly

Source: Export Import Data Bank, Aranca Research

Figure 3 UAE dominated exports in the ME (FY12)

Source: Export Import Data Bank, Aranca Research * Includes contribution of exports from the rest of Middle East countries

0

50

100

150

200

250

FY08 FY09 FY10 FY11 FY12

Exports Imports

59.0%

9.3%

6.6%

5.8%

4.0%

4.0%

2.2%

9.1% UAE

Saudi Arabia

Israel

Turkey

Egypt

Iran

Oman

Others*

CAGR 19%

Success of International Corporate Entities: Middle East 6

……………………………………………………………………………………………………………………………………………........................... Labour, perhaps, is India’s most important contribution to the Middle Eastern region. A large Indian expatriate population lives in the Middle East and has contributed to various productive activities in the region, particularly in the GCC region. Notably, India accounts for more than 50 per cent of the expatriate population of around 12.5 million in the GCC region. The UAE and Saudi Arabia have the largest number of Indians – Saudi Arabia (2.0 million Indians), UAE (1.75 million), Kuwait (0.64 million), Oman (0.58 million), Qatar (0.50 million) and Bahrain (0.40 million). 1.2 Foreign Direct Investment from Middle East to India trending higher Liberalisation of Indian economy led to higher investment inflows. The Foreign Direct Investments (FDI) equity inflows from the Middle Eastern countries to India have gathered pace in recent years, cumulative USD9.0 billion for the period April 2000 to March 2013. The share in total inflows from the Middle East is 5.1 per cent over the same period. In the Middle Eastern region, Cyprus accounted for nearly 70 per cent of the total inflows in FY00–13*, and is used as a channel to mobilise funds and make investments. Excluding Cyprus, the largest investor from the Middle East is the UAE, with cumulative inflows worth USD2.4 billion (24.5 per cent of the region’s total) during the same period, followed by Oman with 3.6 per cent, and Turkey and Israel each contributing 0.6 per cent. Investments from the UAE were mainly concentrated in sectors such as power, services, computer hardware and software, construction, and tourism & hotels.

Figure 4 Country-Wise FDI Equity Inflows from the Middle East

(April 2000 to March 2013)

Source: DIPP, Aranca Research * Includes contribution of exports from the rest of Middle East countries

69.6%

24.5%

3.6%

0.6% 0.6%

0.4% 0.8% Cyprus

UAE

Oman

Turkey

Israel

Saudi Arabia

Others*

Success of International Corporate Entities: Middle East 7

……………………………………………………………………………………………………………………………………………........................... 2. KEY DRIVERS The significant potential offered by India’s domestic market driven by the rising middle class coupled with a cost-competitive and huge talent pool continue to make India favourable for investments from the Middle East. A liberal investment climate combined with determined collaboration and continued efforts by the governments of these nations are encouraging companies in the Middle East to set up operations and manufacturing facilities in India. Bilateral trade and investment relations receive a boost, as both these regions have contrasting demand structures. Efforts by governments to enhance cooperation in defence and science & technology have further buoyed the strategic relationship. 2.1 Distinct demand structures encouraging collaborations Indian economy is poised to grow at 7–8 percent over the coming two decades, and would increasingly demand more energy to fuel this growth. Thus, the rising energy demand of India leads to its heavy reliance on oil imports from the Middle East. Middle East caters to around two-thirds of the total energy demand of India, which is expected to rise further, thereby increasing the region’s strategic importance to India. This has fostered signing of many energy security pacts between India and countries like Iran, Kuwait, Iraq, Qatar and Saudi Arabia. Demand for agro-products, electronics and services by Middle East are catered to by India, thus creating a perfect match. The Middle Eastern countries are heavily dependent on Indian agricultural produce. Also, Middle East was the second largest export market for electronic hardware for India in FY12. India with its capabilities in the service sector can support transition of countries in the Middle East to a knowledge-based economy. Moreover, India can support the economic development of these oil-rich nations by acting as a source of skilled manpower and labour. The most recent deal signed between Iran and India in May 2013 works on similar lines, wherein India would be able to procure the Iranian oil in barter for Indian textile products. 2.2 Middle Eastern countries looking to supplement growth by expanding in India India being the second most populous nation in the world, with a consumer base of 1.2 billion, remains an ideal destination for investments from companies in the Middle East. The total population of the Middle East region is around 0.2 billion. Moreover, the burgeoning middle class population coupled with rising disposable income has led to increasing demand across sectors such as real estate, infrastructure, and banking and insurance. India currently faces a supply shortage of nearly 30 million housing units. This untapped potential has marked the entry into India of real estate–based companies such as Emaar Properties, Engelinvest Group, Gindi Holdings and Elbit Imaging. Given the large Indian market with low access to financial services, Middle Eastern companies such as Abu Dhabi Development Bank, Bank of Bahrain and Kuwait and Samba Financial Group have forayed to India. India is seeking Middle Eastern companies to participate in its infrastructure boom. The need to upgrade and scale up infrastructure in India has led the government to call for private participation. This presents significant avenues for global infrastructure companies. Companies from countries such as the UAE have a commendable track record in building their nation’s infrastructure. Therefore, the USD1 trillion

Success of International Corporate Entities: Middle East 8

……………………………………………………………………………………………………………………………………………........................... infrastructure opportunities have attracted many engineering, construction and consulting companies to India. For example, during the bilateral taskforce meeting held between India and UAE in February 2013, UAE pledged USD2 billion towards infrastructure projects in India. 2.3 Key strategic alliances fuelling trade and investments MoU on cooperation in Science and Technology: To profit from the growing impetus provided to science and technology, a number of MoUs have been signed between India and the Middle East. Some key ones include Science & Technology Cooperation Agreement, followed by Industrial Research and Development Initiative (IIRD) between India and Israel. Through IIRD, a joint industrial R&D fund named i4RD was set up to boost investment and joint ventures between Indian and Israeli companies in the field. India has signed similar agreements on Scientific and Technological Cooperation with countries like Saudi Arabia, Egypt, Kuwait, Iran and Turkey. Joint Commission Meeting: The meeting is held between India and most of the Middle Eastern nations to discuss issues on economy and trade. Some of the meetings held and their outcome in the recent past are as follows:

Figure 5 Some of the Joint Commission Meetings held between India and Middle East countries from 2012

Source: Aranca Research

• Review of bilateral relations and discussion to upgrade Iran’s Chabahar port, which would provide India access to Afghanistan.

• Three MoUs signed on water resources and diplomat training.

May 2012

17th India-Iran Joint Commission meeting

• Discussion held for cooperation in the fields of trade, investments, customs, banking, auditing, energy, agriculture, civil aviation, consular, security, transport, tourism, education, culture, manpower and community welfare.

April 2012

10th India-UAE Joint Commission meeting

• Discussion held for cooperation in the areas of trade and economy, science and technology, culture and information technology.

• MoUs signed for environment protection and action plan for agricultural cooperation.

March 2012

6th India-Egypt Joint Commission meeting

•Discussion held for cooperation in economic, commercial, education, science & technology, consular and community affairs.

January 2012

9th Meeting of the India-Saudi Arabia Joint Commission

Success of International Corporate Entities: Middle East 9

……………………………………………………………………………………………………………………………………………........................... 3. SUCCESS STORIES OF MIDDLE EAST-BASED COMPANIES IN INDIA Companies from the Middle East have set up operations in India to benefit from the country’s infrastructure and consumer boom. Middle East-based companies that have made their mark in India include Dubai Ports World, Emaar Properties, RAK Investment Authority, RAK Ceramics, Zamil Industrial Investment and Construction Products Company. Emaar, which began its journey in India in 2005 with an investment of USD4 billion, is currently one of the largest real estate companies in India. Separately, Dubai Ports World, a leading UAE-based global ports operator, has marked its presence by participating in the development of six major ports in India. Recent entrants in the country include Qatar-based Hassad Food Company, which invested around USD100 million in India in 2013. Among Middle Eastern companies, the UAE-based companies have been in the forefront of investing in India. This is evident from the fact that the UAE was the 10th largest investor for India in the last decade.

Table 1 Top FDI Inflows from the Middle East

3.1 Infrastructure & Real Estate Following are the factors that have encouraged foreign infrastructure companies to invest in India: The Government targeted a spending of USD500 billion on infrastructure in the 11th Five-Year Plan

(FY08–12); the amount has doubled to USD1 trillion in the 12th Plan (FY13–17) Government of India has set up the India Infrastructure Finance Company (IIFCL) to provide long-

term funding for infrastructure projects Interest payments on borrowings for infrastructure are now subject to a lower withholding tax of 5

per cent vis-à-vis 20 per cent earlier 100 per cent tax exemption in road projects for five years and 30 per cent relief for the next five years Granted capital of up to 40 per cent of the total project cost to enhance viability

Foreign Collaborator Indian Company Route FDI Inflows (USD million)

Various non-resident Indians (NRIs) Adani Power Ltd RBI 243.98 Crown Capital Limited India Bulls Financial Services Private Ltd RBI 67.41 Various Investors IL& Fs Transportation Networks Ltd RBI 49.66 Dubai Ventures Limited Bharat Hotels Ltd RBI 38.93 Axiom Telecom Llc Convergem Communication Ltd RBI 34.98 Various Investors DB Reality Private Ltd RBI 33.06 Istithmai Pisc Spicejet Ltd RBI 32.68 RAK Investment Authority Anrak Aluminium Ltd RBI 30.87 Asian Broadcasting Balaji Telefilm Ltd RBI 29.26 Abu Dhabi Investment Authority IL&FS Company RBI 28.23

Success of International Corporate Entities: Middle East 10

……………………………………………………………………………………………………………………………………………........................... Recently, the government approved 49 per cent FDI in aviation for foreign carriers 3.1.1 Dubai Ports World (DP World) DP World is a leading player in international marine terminal operations and development, logistics and related services. The company was formed in 2005 after the merger of operations of the Dubai Ports Authority (DPA), focused on the UAE ports, and Dubai Ports International (DPI), focused on international operations. As of today, DP World’s portfolio consists of more than 65 marine terminals across six continents, including developments underway in India, Africa, Europe, South America and the Middle East. Container handling is the company’s core business and generates around 80 per cent of its revenue. In 2012, DP World handled more than 56 million twenty-foot equivalent container units (TEU) globally. Its capacity is estimated to rise to more than 100 million TEU by 2020, in line with market demand. DP World has a team of 28,000 people serving its customers worldwide. DP World’s operations in India date back to 2002. DPI developed the Vizag port in India in 2002. In February 2005, DPI won a contract to develop and operate an international container transhipment terminal at Kochi, from the Cochin Port Trust (CPT). DP World’s acquisition of P&O a significant leap DP World's operations in India grew significantly after it acquired UK-based P&O in 2006 and got access to its three operating terminals at Jawaharlal Nehru Port (JNPT), Chennai and Mundra. In India, DP World is currently operating six major ports at Nhava Sheva, Mundra, Navi Mumbai, Chennai, Vishakhapatnam and Cochin. The planned capacity at Vallarpadam (Kochi), when fully expanded, is three million TEUs, making it the country's largest container terminal. In Gujarat, Dubai Port World has a 100 per cent equity stake in the USD364.77 million Mundra International Container Terminal (MICT) facility. In addition to port operations, the company operates a rail business under Container Railroad services and Inland Container Depots (ICD) across India. At Jawaharlal Nehru Port Trust, the company operates one of the three container terminals and had also emerged as the lone bidder to develop a smaller container terminal. The company is now looking to bid for the fourth container terminal at JNPT, estimated to cost more than USD1.7 billion, after JNPT cancelled a contract awarded to a consortium of Port of Singapore and ABG Ports. DP World also operates the country's first trans-shipment hub at Cochin and recently received cabotage relaxation from the Union government allowing foreign vessels to enter domestic waters. The company is planning to bring all its Indian assets under a holding company, as many of them have a convoluted share holding pattern with holding companies in Australia and the UK. Tapping minor ports opportunity in India DP World is scouting for operating terminals and allied business across minor ports in India. As per

Success of International Corporate Entities: Middle East 11

……………………………………………………………………………………………………………………………………………........................... estimates, minor ports have been witnessing a double-digit growth in recent times1, while major ports grew just 0.38 per cent in April–December. India currently has 187 minor ports and 13 major ports. Proposed container terminal investment granted approval The Ministry of Finance (India) granted approval to DP World for its proposed container terminal investment of about USD82 million in the proposed container terminal project at Nhava Sheva. The 17-year concession to extend the port’s container berth by 1,082 ft and construct a new 42 acre container yard will increase the port’s annual capacity by an estimated 800,000 TEU. The new facility would be equipped with four rail mounted quay cranes and 12 rubber tyre gantry cranes. Approval from the Ministry of Finance came after a contract was agreed with the port authority in November 2012 to establish a special operating vehicle, supplied by supply chain solutions company Hindustan Port Private Limited, which will oversee the project. The terminal is expected to begin operations in 2015. The company will invest in setting up container freight stations and inland container depots in India. Container freight stations are licensed by the customs department to help decongest a port by shifting containerised cargo and customs-related activities outside the port area, but remain close to the port. Inland container depots are common user facility with public authority status offering services for handling and temporary storage of import or export laden cargo and are usually located in land-locked areas. DP World’s growth in India came after its acquisition of P&O in 2006, which gave it access to three operating terminals at the Jawaharlal Nehru Port (JNPT), Port of Chennai and Mundra Port. Apart from investing in a container terminal project at JNPT, the company's strategy in India is to scout for operating terminals across minor ports, which have shown tremendous growth in recent times. 3.1.2 Abu Dhabi National Energy Company PJSC (TAQA) Founded in 2005, Abu Dhabi, UAE-based TAQA is a global energy company that operates in five segments: Power and Water Segment – UAE, Power Segment – Others, Oil and Gas Segment – North America, Oil and Gas Segment – UK, and Oil and Gas Segment – Netherlands. The company operates electricity generation plants in the UAE, Morocco, India, Ghana, Saudi Arabia, the Caribbean Islands and North America as well as produces and supplies desalinated water in the UAE. It has a power generation capacity of 16,395 mega watts and water desalination capacity of 887 million imperial gallons per day (MIGD). It is also engaged in exploration, development and production of crude oil, natural gas, and natural gas liquids as well as related gas storage, oil and gas processing, and transportation activities in North America, the UK, the Netherlands, and the Kurdistan region of Iraq. The company also has interests in renewable energy. 1 Source: ET article: Dubai Ports World to expand India ops, sees potential in minor ports – 14 March 2012

Success of International Corporate Entities: Middle East 12

……………………………………………………………………………………………………………………………………………........................... Acquisition-driven strategy TAQA has implemented an acquisition-driven growth strategy globally. In India, the company is concentrating on the power sector. The company’s USD2.3 billion acquisition of global assets of US-based CMS Generation and Swiss ABB in February 2007 included a power plant in India. The 250 MW power lignite-fired power plant in the Southern Indian region of Neyvelli was owned equally by ST CMS and ABB Ventures, subsidiaries of two global companies. The plant’s entire power generation is supplied to the Tamil Nadu Electricity Board under a 30-year agreement. TAQA is looking to expand the plant’s capacity by 100 per cent to 500 MW. Initial engineering development work and environmental permitting process was initiated in 2010 and the new capacity is expected to be commissioned by 20152. Expanding into hydropower In January 2013, TAQA purchased a minority interest in Himachal Sorang Power Limited (HSPL), a developer of a 100 megawatt hydroelectric plant in northern India, through a joint venture with Jyoti Structures Ltd (JSL), an India-based power infrastructure company. The investment complements TAQA’s existing power generation business in India and supports its emerging renewable energy stream. The deal is part of a set of acquisitions by the company, including buying a 50 per cent stake in a wind power project in Minnesota, a 53.2 per cent operating interest in an oil block in Iraqi Kurdistan as well as assets in the North Sea from BP for over USD1.3 billion. TAQA and JSL plan to progressively acquire 100 per cent of the share capital of HSPL and would jointly operate the Sorang plant, which is due to begin operations later in 2013. Once fully acquired, TAQA will hold a majority stake in the joint venture. Building efficiencies in IT operations through outsourcing To improve focus on core competencies and bring in efficiency in its IT operations, TAQA decided to outsource its infrastructure operations and application management to Indian IT services provider Wipro in December 2009. TAQA awarded a five-year contract to the company to help manage its global operations, which currently extend across four continents. Under the agreement, Wipro was expected to set up an offshore development centre in Chennai, India, dedicated to TAQA's requirements, with a capacity of staffing up to 200 people and plans to scale up operations over the next five years. TAQA maintains its focus on the power sector in India. Its USD2.3 billion global acquisition of CMS Generation and Swiss ABB in February 2007 gave it access to CMS' lignite-fired power plant in India. It has since expanded into hydroelectric power through a joint venture with Jyoti Structures Ltd (JSL). Furthermore, TAQA outsourced its infrastructure operations and application management to India-based Wipro in December 2009 so as to maintain focus on core competencies and make its IT operations more efficient. 2 http://www.taqaglobal.com/taqa-worldwide.aspx?sc_lang=en#/allregion/alloperations/India accessed on 06 June 2013

Success of International Corporate Entities: Middle East 13

……………………………………………………………………………………………………………………………………………........................... 3.1.3 EMAAR Properties PJSC Emaar Properties commenced operations in July 1997 in the UAE. Emaar is a well-established real estate developer and management company. It has developed approximately 89 million square feet of real estate across residential, commercial and other business segments, with operations in 14 countries spanning the Middle East, North Africa, Asia and Europe. In its primary market Dubai, Emaar’s projects include Burj Dubai (world's tallest building), Dubai Mall (world’s largest entertainment and shopping malls), and Dubai Fountain (one of the world’s tallest performing fountains). In the Kingdom of Saudi Arabia, Emaar is developing the King Abdullah Economic City, a 168-million-square meter development, which will include a sea port, industrial zone, central business district, resort zone, education zone and residential communities. Some of Emaar’s other international projects include Marassi, an up-market tourism resort and Uptown Cairo, a master-planned residential project, both in Egypt, Amelkis II and Amelkis III in Morocco, Samarah Dead Sea Resort in Jordan, Tuscan Valley Houses in Turkey, and The Eighth Gate in Syria. Emaar also owns and manages a diverse and award-winning portfolio of leisure assets, including golf resorts, polo and equestrian club, health clubs, and the Dubai Marina and associated yacht club. Emaar has also entered into an exclusive agreement with Giorgio Armani SpA to build and manage Armani hotels and resorts globally. Joint venture with MGF Emaar entered India through a joint venture with India’s MGF Development Limited (MGF) – Emaar MGF Land Limited. The real estate company commenced operations in India in February 2005. It has a pan-India presence and its operations span all key segments of the Indian real estate industry, namely, residential, commercial, retail and hospitality sectors. The company's operations encompass various aspects of real estate development, such as land identification and acquisition, project planning, designing, marketing and execution. At present, it is focussing on the development of residential projects in Delhi, the NCR, Mohali, Hyderabad, Chennai and other key Indian cities. Strong portfolio of current and planned projects In its Annual Report 2011, Emaar MGF stated that it has land reserves of more than 11,000 acres in India, with total planned development of over 470 million sq ft. The company’s projects are underway in the states of Punjab, Delhi, Haryana, Tamil Nadu, Rajasthan, Madhya Pradesh and Andhra Pradesh. Among key projects is Mohali Hills, a master-planned community spread over 3,000 acres in Mohali, Punjab. It features residential plots, town houses and villas, supported by an integrated infrastructure of civic amenities including landscaped gardens, shopping and recreational centres. Construction is progressing and is expected to be completed in 2012. Mohali Hills consists of about 14,768 freehold residential units spread over four distinct communities – Mohali Hills, The Views, The Villas and Central Plaza. It is also developing Boulder Hills, a residential-cum-leisure complex in Hyderabad. In Gurgaon near New Delhi, Emaar MGF is developing residential projects – Palm Drive, Palm Springs, Palm Hills, Palm Terrace Select and Emerald Hills – with a combined area of 12.41 million sq ft. The list of projects completed includes the Commonwealth Games Village – Emaar MGF was the sole developer selected for the project through a competitive process. Since 2007, the company has expanded its projects in India from two cities to seven cities and increased the saleable area derived from projects under

Success of International Corporate Entities: Middle East 14

……………………………………………………………………………………………………………………………………………........................... construction from 8.9 million square feet to 28.2 million square feet. The company’s presence in different regions across India enables it to tap the demand arising from different regions and diversify its exposure to regional demand cycles. 3.1.4 TECOM Investments Established in 2005, TECOM Investments is a diversified company with interests in real estate, information and communication technology, media, education, science & energy, and manufacturing & logistics. TECOM Investments is a subsidiary of Dubai Holding. It focuses its activities on development of properties for knowledge-intensive sectors. In Dubai, the company through its portfolio company TECOM Business Parks has built 10 interconnected business parks arranged under five industry clusters. ICT – Dubai Internet City and Dubai Outsource Zone Media – Dubai Media City, Dubai Studio City and International Media Production Zone Education – Dubai Knowledge Village and Dubai International Academic City Science – DuBiotech and ENPARK Manufacturing and Logistics – Dubai Industrial City

TECOM Investments has also come up with the SmartCity concept. Promoted by TECOM Investment subsidiary SmartCity, this concept involves creating a global network of self-sustained business townships to foster the knowledge economy. So far, two SmartCities have been developed, one each in Malta and India. SmartCity Kochi SmartCity Kochi is an industrial township for knowledge-based companies located in Kochi, Kerala. The township, which will be based on the models of Dubai Internet City, Dubai Media City and Dubai Knowledge Village, is being developed jointly by SmartCity and the Government of Kerala. SmartCity Kochi will provide infrastructure, environment and support systems to promote the growth of knowledge-based industry companies. In addition, it will offer a host of business support services as well as residential, hospitality, retail and recreational facilities. SmartCity Kochi gaining momentum The master plan for the project's first phase was approved in April 2013. According to the plan, the first phase would be set up in an area of 50 acres. Construction of the first building would commence on 1 July 2013, and the work is likely to complete in 18 months. According to the agreement signed by the Government of Kerala and TECOM Investments in May 2007, SmartCity expects an investment of USD300 million3. The project, granted a single SEZ status by the 3 Source: Article: Smart City Project: Agreement signed – 21 May 2007

Success of International Corporate Entities: Middle East 15

……………………………………………………………………………………………………………………………………………........................... Ministry of Commerce in December 2011, would span 246 acres. On completion, it would be one of the largest IT parks in the country. It is expected to have about 820,000 square meters of built-up space, with approximately 580,000 square meters set aside for IT, ITES and allied services. 3.1.5 Construction Products Holding Company (CPC) Founded in 2005, Saudi-based CPC manufactures construction materials. The company has branches in Riyadh, Dammam, Bahra, Abu Dhabi, Cairo, Doha and Algeria. It has also established presence in Qatar, UAE, Egypt, India and Syria. In June 2012, the company announced plans to expand base in India by taking up a project involving the development of an industrial park in partnership with IL&FS Engineering & Construction. This is CPC Holding’s biggest project in India, where its work mainly involved construction of factories. In late 2012, CPC Holdings established a limited liability company – CPC India for Industrial Development. Its businesses involve development of industrial parks, setting up greenfield factories for manufacturing building materials, and acquisition of existing building materials factories. According to the company, CPC India also plans to start with a pre-cast factory and a ready-mix plant to support its operations in the country. Middle East-based companies have created a substantial presence in the infrastructure and real estate businesses in India by replicating the success achieved in their domestic markets. While companies from the Asia-Pacific and Middle East cater mainly to the demands of large-scale infrastructure projects in India, their counterparts from developed nations focus on innovating high-technology products for clients across sectors. Key factors driving companies into the real estate and infrastructure sectors in India are the substantial investment opportunities, cost-effective manpower, and R&D as well as manufacturing abilities offered by the country. 3.2 Engineering Middle Eastern conglomerates such as Zamil and Consolidated Gulf Company have successfully established their presence in the Indian engineering space. Factors that have encouraged foreign engineering companies to invest in India are: The Government of India allows FDI of up to 100 per cent in the engineering & capital goods sector. Foreign technology agreements are permitted under the automatic route. No industrial licence is required for the sector. There is no upper limit to payments for transfer of technology, design & drawing, royalty, etc., to a

foreign collaborator; imports and exports are allowed unreservedly. The public and the private sector have initiated large scale investments in the country’s

infrastructure and industrial sectors.

Success of International Corporate Entities: Middle East 16

……………………………………………………………………………………………………………………………………………........................... 3.2.1 Zamil Industrial Investment Company Headquartered in Saudi Arabia, Zamil Industrial Investment Company (ZIIC) is one of the world’s leading business groups providing design and engineering solutions to the global building and construction industry. The company is a pioneer in manufacturing and fabrication of complete project requirements. It offers services ranging from pre-engineered steel buildings, steel structures, air conditioning and climate control systems to industrial and residential applications, telecom and transmission towers and solar power projects, among others. ZIIC was formed in 1998 by the merger of four companies, which currently form the company’s four divisions: Steel; Heating, Ventilation & Air Conditioning (HVAC); Insulation and Concrete. ZIIC employs more than 10,000 people across 60 countries and sells products and services in more than 90 countries. The company has set-up manufacturing facilities in Saudi Arabia, the UAE, Egypt, India, Vietnam and Italy.

Figure 6 Organisation structure of ZIIC (Global)

Source: Company Website * There are three other subsidiaries of ZIIC in the HVAC segment Zamil Group entered India in 1996, prior to the formation of ZIIC. The company established its first Pre-Engineering Building Company at Chennai, India. In 2006, through its subsidiary Zamil Steel Holding Company, ZIIC formed Zamil Steel Buildings India Private Ltd to cater to the steel industry and began commercial production in 2008. The Indian subsidiary has a manufacturing facility devoted to pre-engineered (steel) buildings (PEB) in Pune, India. Spread across 87,000 square meters, the Pune facility has an annual production capacity of 48,000 MT. Since its entry, the company has catered to 700 projects across India, with the help of its complete PEB building capabilities. Apart from serving the Indian market, since 2010, the Pune facility is being used to supply products to Bhutan, South Africa, Sri

Zamil Industrial Investment Company

(ZIIC)

Steel

Zamil Steel Holding Company Ltd

Building Component Solutions LLC

(BCOMS)

Petro-Chem Zamil Co Ltd

HVAC

Zamil Air Conditioners Holding

Co Ltd

Zamil Airconditioners India Private Ltd (ZAC

India)

Middle East Air Conditioners Ltd

(MEAC)*

Insulation

Gulf Insulation Group (GIG)

Concrete

Rabiah & Nassar and Al Zamil Concrete

Industries Company Limited

Others

Zamil Infra Private Ltd (ZIPL)

Energy Central Company (ECC)

Success of International Corporate Entities: Middle East 17

……………………………………………………………………………………………………………………………………………........................... Lanka and Saudi Arabia, among others.

Figure 7 Timeline of Zamil in India

Source: Company Website Tapping the telecommunications equipment and infrastructure market In 2008, ZIIC entered into a joint venture with New Delhi Telecom to form Zamil Infrastructure Pvt Ltd (ZIPL). The venture provides telecom infrastructure like galvanised telecom towers, shelters with sandwich panels, air conditioning equipment and power interface units, among others. This helped the company enter into India’s telecom sector. Currently, ZIPL provides services across the Indian telecom, infrastructure and renewable energy sectors.

1996

Announces establishment of Zamil Steel India and new steel

factory in Pune, India

2006

2007

Enetred into a JV with India-based Advantec Coils Private Ltd

and held 30% stake

2008

2008

Enetred into a JV with India-based New Delhi Tele-Towers

Private Ltd

2008

Established the first overseas Pre-engineered Buildings

engineering company in Chennai, India

Zamil Steel India opened an engineering office in Cochin with

a total manpower of 92 engineers to serve both Zamil

Steel Singapore and Zamil Steel Vietnam

Zamil Steel Launches Operations

in Pune, India on 14 November

2008

2010

2012

Way Ahead

Zamil Steel India exports for the first time to Bhutan, South Africa,

Sri Lanka and Saudi ArabiaBecame the first Saudi company

to establish a fully owned subsidiary in India by acquiring

remaining 70% stake in Advantec Coils Private Ltd

Plans investments worth USD0.6 billion in India in the next 2-3

years

Success of International Corporate Entities: Middle East 18

……………………………………………………………………………………………………………………………………………........................... Recent expansion to tap India’s HVAC market In India, backward integration has been used as one of the growth strategies. In early 2008, Zamil acquired a 30 per cent stake in India-based manufacturer of air conditioners Advantec Coils Private Ltd (Advantec) to enter the Indian HVAC market. Advantec had been a sourcing partner to Zamil Air Conditioners (ZAC) in Saudi Arabia for many years. Through this acquisition, Zamil not only strengthened its sourcing channel but also gained access to the large Indian market. Advantec operates two fully integrated manufacturing plants in Himachal Pradesh, India. The combined annual production capacity of these two plants is 1.2 million units, including residential and commercial air conditioners. In addition, the company has original equipment manufacturer (OEM) agreements with various foreign brands. Zamil acquired the remaining 70 per cent stake from Advantec for USD60 million4 in 2012. The company was then renamed Zamil Air Conditioners India Pvt Ltd. This was the first major FDI from a GCC player in the Indian air condition segment. Going forward, ZAC India plans to offer turn-key HVAC solutions to its clients. Investment worth USD600 million planned in India in the next 2–3 years ZIIC plans to invest USD600 million in the Indian subcontinent over the next 2-3 years. This is in line with the company’s strategy to expand presence in the Indian market, while reducing it in the failing European markets. The company would primarily focus on the Indian HVAC market. The recent acquisition of Advantec is aligned to this strategy. The company would now focus on expanding Zamil Air Conditioner’s manufacturing base in India, with a goal of capturing 10 per cent share of the total air conditioner market worth USD3 billion over the next five years. 3.2.2 Consolidated Gulf Company Incorporated in 1987, Qatar-based Consolidated Gulf Company (CGC) is one of the leading engineering and technology companies in the Middle East. The company has interests across telecom, information technology, construction and oil & gas industries, among others. CGC caters to these industries with offerings ranging from consultancy, engineering and planning, to operation & management and man power services. The company has operations in Abu Dhabi, Kuwait, India and Colombia. CGC started operations in India in 2009 through its wholly owned subsidiary CGC Converse Technologies Private Limited (CGC Converse). Its entry in India was aligned with the parent company’s strategy to expand its global footprint and provide services to large international projects across 3D laser scanning and engineering design & Human System Engineering (HSE) domains. Also, large scale development in India’s industrial and infrastructure sectors was a prime factor in driving CGC’s entry into India. 2011, a landmark year for operations in India In 2011, CGC Converse made its first infrastructure investment in India and won its first large Indian contract. Its Indian operations were moved to its own state-of-the-art office in Hyderabad, India. The four-storied 10,000-square-feet facility serves as CGC's centre for design excellence. The infrastructure 4 Conversion rate used: 1 USD = INR 50

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……………………………………………………………………………………………………………………………………………........................... investment is a part of the parent company’s strategy to provide design and back office services to oil & gas, refining, petrochemicals, fertilisers, power, pharmaceutical and utility owner/operator and EPC companies globally. In 2011, CGC Converse achieved a milestone by bagging a million dollar project with Oil and Natural Gas Corporation Ltd (ONGC), its first in the country. The project entails creating, digitising and updating Process & Instrumentation Diagrams (P&ID) across ONGC’s offshore platforms in an Intelligent SmartPlant format. The company is also required to provide five years of annual maintenance services to ONGC. This project has provided CGC with access to the Indian market and an opportunity to provide engineering and technology services to other private and public players in the country. In conclusion, the key factors driving FDI into the Indian engineering and construction space include the availability of cost-competitive manpower, R&D as well as manufacturing capabilities and the huge investment opportunity. Companies from the Middle East have primarily catered to demands from large-scale infrastructure projects in India and are keen to recreate in India the success achieved in their domestic markets. Meanwhile, companies from advanced economies are focussed on innovating high-technology products for Indian clients across sectors such as healthcare, energy, power and oil & gas. 3.3 Ceramics Factors that have encouraged foreign ceramics companies to invest in India are: In India, FDI up to 100 per cent under the automatic route is allowed for the development of

townships, housing, built-up infrastructure and construction development projects. There is huge domestic demand from the world’s second largest population, coupled with a boom in

the housing sector. The untapped market as per capita ceramic tiles consumption in India stands at 0.30 square meters

per person vis-à-vis more than 2 square meters per person in countries like China, Brazil and Malaysia.

3.3.1 Ras Al Khaimah (RAK) Ceramics The UAE-based Ras Al Khaimah (RAK) Ceramics is a ceramics manufacturer, with global annual output of 117 million square meters of ceramic and porcelain tiles, 4.5 million pieces of bathware and 20 million pieces of tableware. Global production of tiles exceeds 360,000 square meters and 12,000 pieces of sanitary ware per day from its 10 state-of-the-art plants in the UAE and one plant each in China, Sudan, Bangladesh, India and Iran. The USD1 billion global conglomerate is the world’s largest ceramic tiles manufacturer and supplies products to over 160 countries. It staffs around 8,000 people in the UAE and 12,000 employees worldwide. RAK entered India in 2006 by setting up its fifth overseas plant. The plant started production with a capacity of 20,000 square meters of tiles per day. It is spread over 200 acres of land at Samalkot in the East Godavari district of Andhra Pradesh. As per RAK, it is the only company in India to manufacture all nine variants of vitrified tiles. The company also has a strong sanitary ware division, which manufactures

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……………………………………………………………………………………………………………………………………………........................... several product lines from its plant in Andhra Pradesh. In 2010, RAK Ceramics launched KLUDI-RAK in India with KLUDI, one of the leading faucet companies in Germany. KLUDI-RAK introduced the first brand licensed product in the bath concepts category in India, with brands like JOOP! and ESPRIT. RAK distributes products in India through a network of 18 exclusive showrooms and over 850 dealer showrooms. Expansion of existing plant to cater to rising demand RAK India expanded capacity at its Andhra plant by 50 per cent in 2009. The boom in India’s real estate and construction sectors, coupled with RAK’s market leading position, drove demand higher. The uptake of RAK’s high-end flooring tiles is especially strong given the surge in hospitality, IT, banks and renovation segments. As demand was outstripping supply, the company undertook a 50 per cent capacity expansion at the Andhra plant at an estimated cost of USD20 million5. Currently, the plant has a manufacturing capacity of 30,000 square meters of vitrified tiles and about 1,500 sanitary ware pieces per day. Moving west to cater to the northern market RAK Ceramics plans to invest USD150 million in its second plant planned in the western state of Gujarat. The company is reported to have identified about 50–70 acres of land at Himmatnagar in Mehsana district for the plant. The strategy behind setting up a second plant rather than further expanding capacity at its existing plant is to improve efficiencies in product distribution to North India. Of the total tiles produced in Andhra Pradesh, 50 per cent are sold in South India, 30 per cent in West India and 12 per cent in the eastern part of the country. The balance eight per cent is exported. Setting up a plant in Gujarat will give RAK access to the northern market and bring down transportation costs. Capacity of the plant is expected to be 20,000 square meters initially; there are plans to scale up production capacity to 70,000 square meters by the end of the fifth year. Targeting revenues of USD400 million by 2015 RAK Ceramics recorded revenues of USD120 million in 2012 in India. During the year, RAK India began offering the Venezia series in Gujarat, started a new line of business for the Ceramic division and launched products like the 2*2 Wurtzite series and 4*2 slabs from the AP-Samalkot plant. Its sanitary ware division reported positive results for the first time in 2012. RAK plans to launch a new range of bathware, vanities and allied items and intends to become a complete bath and tiling solutions company in India. By 2015, it targets revenues from RAK India operations to reach USD400 million. In the ceramics segment, RAK has been rapidly expanding capacity in India to cater to increasing demand from the country’s booming real estate and construction sectors. The company is also diversifying geographically within the country, to manage logistical challenges better. RAK has been creating new ranges and designs to specifically cater to Indian tastes and preferences. 5 Conversion rate used: 1 USD = INR 50

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……………………………………………………………………………………………………………………………………………........................... 3.4 Financial Services Investments in India by Middle East-based financial services companies have been driven by the following factors: The Government of India allows FDI of up to 74 per cent in the private banking sector. FDI of up to

49 per cent is allowed through automatic route and FDI beyond 49 per cent, but up to 74 per cent is allowed through government approval route.

Foreign banks are permitted to have either branches or subsidiaries. Foreign banks regulated by the

banking supervisory authority in the home country and meeting Reserve Bank‘s licensing criteria are allowed to hold 100 per cent of paid up capital to enable them to set up a wholly owned subsidiary in India.

FDI of up to 20 per cent (FDI and Portfolio Investment) is allowed in India’s public banking sector

through government approval route. 3.4.1 Abu Dhabi Investment Authority (ADIA) Established in 1976, the Abu Dhabi Investment Authority (ADIA) is a globally diversified investment institution that invests funds on behalf of the Government of Abu Dhabi. The fund makes investments based on fundamentals and focuses on long-term value creation. ADIA manages a substantial global investment portfolio diversified across ten asset classes: developed equities, emerging market equities, small cap equities, government bonds, credit, alternative (hedge fund and managed futures), real estate, private equity, infrastructure and cash. The fund returned 7.6 per cent on annualised basis over a 20-year period as of 31 December 2010. With an estimated USD627 billion of assets under management6, ADIA was ranked the world’s largest sovereign wealth fund in 2011. In 2010, ADIA set up a new Active India portfolio in its Internal Equities department to increase investments in the country amid worsening investment climate in developed nations. India part of ADIA’s focus on emerging market equities Broadly, sovereign wealth funds are seen shifting focus towards emerging markets to make up for lower growth prospects in developed markets. In line with this trend, ADIA lowered its target exposure to developed market stocks from 35–45 per cent in 2011 to 32–42 per cent in 2012. It also reduced its minimum exposure to Europe from 25 per cent in 2011 to 20 per cent in 2012; maximum allocation remained unchanged at 35 per cent. While ADIA maintained its allocation to emerging market stocks between 10 per cent and 20 per cent, it indicated higher interest in investing in these markets. In India, ADIA has invested substantially in publicly listed Indian companies in sectors such as housing finance, pharmaceuticals, banking and information technology7. 6 Source: Sovereign Wealth Fund Institute 7 Source: http://alphaideas.in/2013/04/14/portfolio-of-abu-dhabi-investment-authority-in-india/ accessed on 06 June 2013

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……………………………………………………………………………………………………………………………………………...........................

Table 2 ADIA’s portfolio in India

Company Date Number of Shares % Stake HDFC December 2012 190,72,788 1.24 LIC Housing Finance December 2012 73,93,983 1.47 Rural Electn. Corp December 2012 99,79,317 1.01 Dr Reddys Lab March 2013 30,77,750 1.81 HDFC Bank March 2013 486,57,578 2.04 Infosys March 2013 128,05,232 2.23 Mahindra Satyam March 2013 163,21,705 1.39 DiviS Lab March 2013 13,88,096 1.05

Scouting for direct investment opportunities in India’s real estate sector The fund is currently looking for direct investment opportunities in Indian real estate to diversify from its current strategy of investing money into the country through realty or private equity funds. ADIA's investments in Indian real estate total USD400–500 million8, largely through property and private equity funds. An invitation to join India’s infrastructure building efforts In January 2012, a delegation led by Sheikh Hamed bin Zayed Al Nahyan, Managing Director of ADIA, met India’s Urban Development Minister Mr. Kamal Nath to discuss investment opportunities in the urban sector. India invited ADIA to invest in the USD90 billion Delhi Mumbai Industrial Corridor (DMIC) and other infrastructure funds. Both countries agreed that UAE and India should work towards a much greater engagement in the urban infrastructure sector and also agreed to set up a joint working group to facilitate investments for this purpose. In early 2013, the two countries agreed in principle to start negotiations on a Bilateral Investment Protection Agreement during Indian Finance Minister P. Chidambaram’s official UAE visit. To encourage the flow of UAE’s large surplus of funds into India, the Indian government agreed to treat ADIA investments separate from those by the Abu Dhabi Investment Council (ADIC). If ADIA and ADIC were treated as a single entity, their total permitted investments would be lower in sectors with specified upper limits for foreign participation. While India is looking for greater participation of private capital in its USD1 trillion infrastructure spending plan, ADIA has expressed keen interest in participating in the infrastructure boom. Overall, India forms an important part of the strategy of sovereign wealth funds, which are increasingly shifting focus towards emerging markets to offset the lower growth prospects in developed markets. In India, ADIA’s investments have been concentrated in publicly listed companies in sectors such as housing finance, pharmaceuticals, banking and information technology. ADIA is keen on directly investing in the Indian real estate space, instead of routing investments through realty funds. 8 Source: Reuters article: Abu Dhabi sovereign fund looks to buy India property – 09 March 2012

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……………………………………………………………………………………………………………………………………………........................... 3.4.2 Kuwait Investment Authority (KIA) KIA is Kuwait’s sovereign wealth fund, the seventh largest globally. It is responsible for the management and administration of Kuwait’s General Reserve Fund and Future Generations Fund, in addition to other funds assigned to it by the State’s Minister of Finance. KIA, with its head office in Kuwait City and a branch office in London, UK, invests in local as well as international markets. KIA has a USD1 billion portfolio in India covering sectors like power, automobile, construction and development, and telecommunications. Its investments are managed by Birla Sun Life Mutual Fund, DSP Blackrock, ICICI Prudential, Canara Robeco Mutual Fund, and Franklin Templeton. KIA plans to be a long-term investor in India, with about 90% of the corpus to be invested in equities. Further, India is seeking investments from the fund in sectors like infrastructure, petrochemicals, fertilisers, education and civil aviation. Financial companies across the globe have established their presence in India due to the immense investment potential in the country. Notably, a majority of the Middle Eastern companies setting aside funds for India are sovereign investment institutions focusing on long-term value creation through investment in various asset classes. 3.5 Others A number of Middle Eastern companies have entered India in the past two years. These companies’ successes and strategy will pan out only in the next five to ten years. 3.5.1 Hassad Food Company Established in 2008, Hassad Food Company (HFC) is a 100 per cent subsidiary of Qatar Holding – one of the operating divisions under Qatar Investment Authority (QIA). The company’s business model involves investing in agricultural businesses and assignments worldwide. It has four local subsidiaries – Hassad Qatar, Roza Hassad, National Food Company (NAFCO) and Arab Qatari Agricultural Company (QATFA). In addition, HFC owns affiliates in Australia, Sudan and India. HFC formulated a new global expansion strategy in January 2013. In line with this global strategy, HFC acquired a 51 per cent stake in India-based Bush Foods Overseas Pvt Ltd for an estimated USD100 million in April 2013. This is the first time a Qatari company has acquired a majority stake in India’s agri-business. The investment in Bush Foods Overseas Pvt Ltd would be used to increase its processing capacity by 25–50 per cent and also enhance its brand image. Given the large domestic market offered by India, the company plans to make further investments in the country. 3.5.2 Composite Pipes Industry LLC Headquartered in Oman, Composite Pipes Industry (CPI) is one of the leading manufacturers of Glass Fibre-Reinforced Plastics (GRP) and Glass-Reinforced Vinyl Ester (GRV) pipes systems and supplies its piping solutions worldwide. The company offers fully engineered piping solutions with integrated services in design, stress analysis, surge analysis, pre-fabrication of spools and construction domain. The production capacity of CPI is 8,400 MT per annum – highest in Glass-Reinforced Epoxy (GRE) system

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……………………………………………………………………………………………………………………………………………........................... in the GCC. Some of the renowned clients of CPI include Petroleum Development of Oman, Petrofac International Limited, GS Engineering, Worley Parsons Oman Engineering, Oman Refinery and Petreco Cameron, among others. In October 2012, CPI had announced its plans to enter the Indian markets by setting up a manufacturing base by 2013. The company plans to build a 5,000-MT facility, with an investment of around USD10 million. Given the growth prospects in India, the company expects to derive USD40 million from its India operations by 2015. Moreover, CPI would use this Indian manufacturing hub to cater to markets in Singapore, Malaysia, Thailand, Indonesia, Vietnam, Sri Lanka and Bangladesh. 3.5.3 Etihad Airways Founded in 2003 by a royal decree issued by Abu Dhabi's royal family, Etihad Airways provides air transportation services for passengers and cargo in the UAE and overseas. It serves about 50 destinations in Europe, Asia and the Middle East. It also offers services in North America, where its destinations include New York and Toronto. The company’s fleet comprises more than 40 Airbus aircraft, including 14 wide-body A330s and eight medium-range A320s. In April 2013, Etihad Airways announced plans to acquire a 24 per cent stake in the India-based Jet Airways for USD379 million. At the end of July, the deal received a regulatory nod from the Foreign Investment Promotion Board (FIPB) with various amendments to the original proposal. The modifications were accepted by both companies and incorporated in the deal. The deal is currently awaiting approval from the Securities and Exchange Board of India (SEBI) and the Competition Commission of India (CCI), with results expected in the first week of August. The deadline for the deal has been extended until the end of August from the previous deadline set for July-end. The deal makes Jet the first Indian airline to benefit from a policy change that permits foreign investment of up to 49 per cent in domestic airlines. Further, on announcement of the deal, India signed a bilateral agreement with Abu Dhabi to increase the number of weekly seats available on flights between India and the UAE, from 13,330 currently to 50,000, over a period of three years. 3.5.4 Kapci Coatings Established in 1985, Kapci Coatings operated as Kantara Paints until 2002. The company specialises in car refinish paints and wood coatings. It is the market leader in Egypt in this segment. Apart from its leadership position in the domestic market, Kapci Coatings exports to around 45 countries worldwide. The company’s 210,000-square metre manufacturing facility has an annual production capacity of around 80,000 tonnes. To gain access to the global markets, the company has established branches in China, India, Brazil and the UAE. The company’s Indian subsidiary – Kapci Coatings India Pvt Ltd – plans to construct a manufacturing facility for surface coatings and paints in Karnataka, India. The MoU for the project was signed in June 2012. The facility would span 20 acres and the expected investment is USD11 million.

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……………………………………………………………………………………………………………………………………………........................... 3.5.5 Kuwait Petroleum Corporation (KPC) Established in 1980, the state-owned KPC operates through 10 subsidiaries in Kuwait and abroad. Its activities involve all aspects of the hydrocarbon industry, ranging from exploration and production of crude oil and natural gas, to production, marketing and sale of fuel and other petroleum derivatives. KPC set up its office in India in 1999. The office supports the company’s headquarters in Kuwait with activities comprising market research, supplying client profiles, and evaluating acquired market intelligence. In addition, the office actively participates in discussions on possible joint ventures in India. In April 2012, the company signed two contracts with India's Bharat Petroleum Corporation to supply it with 68,000 oil barrels per day (bpd); it renewed one contract of 46,000 oil bpd and signed a new contract of 22,000 oil bpd. The company also stated that negotiations are on for the supply of Kuwaiti liquefied natural gas to India and a deal is expected shortly. 4. CONCLUSION Relations between India and the Middle East have been encouraged by India’s energy requirements and demand for Indian goods and labour from the Middle East. Bilateral ties have strengthened in recent times, as trade between the countries increased 29.3 per cent y-o-y to USD202.9 billion in FY12, with expectations for a 34 per cent growth in 2013. Between April 2000 and March 2013, FDI equity inflows from the Middle Eastern countries to India totalled an incredible USD9.0 billion. Starting April 2000, the Middle East contributed 5.1 per cent of total inflows in India, with UAE being the 10th largest investor in the past decade. Stronger ties have been driven by frequent exchanges of high-level visits between India and various Middle Eastern countries. Middle Eastern companies have gained global aspirations in recent years backed by strong performance in their home markets. India features prominently in these global expansion plans. Relaxation of restrictions on FDI by the Indian government, coupled with immense growth opportunities arising from the ‘emerging’ status of the Indian marketplace, has attracted many Middle Eastern companies to invest in India. For instance, demand for housing has encouraged Emaar Properties, Engelinvest Group, Gindi Holdings and Elbit Imaging to enter India. Similarly, India is actively pitching for Middle Eastern companies to partake in infrastructure development in the country. Many of these companies have entered India only recently. Going forward, their successes will further encourage other Middle Eastern companies to look at investing in India.

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