India Set to Become MENA’s Top Trading Destination by 2030

India will remain a top five trading corridor for the UAE, Egypt and Saudi Arabia according to HSBC's latest Trade Forecast report. By 2030, the country will be the UAE's top export destination accounting for 14% of exports, and Saudi Arabia's second largest export destination accounting for 18.5% of exports. India is already Egypt's number one export destination and will maintain that position through to 2030, accounting for 15.4% of exports.

Simon Constantinides, HSBC’s Regional Head of Global Trade and Receivables Finance Asia-Pacific, said: “Whilst India and MENA have had strong ties in the past, these findings provide real insight into their potential trade partnership in the decades to come. Their growing connectivity will provide many opportunities to businesses within these two markets, but also to businesses looking to benefit from the global rise in the emerging markets.”

The Trade Forecast predicts that by 2020, India will overtake the USA to import the highest share of goods for infrastructure globally as it invests in building its domestic networks. According to India’s Ministry of Commerce and Industry earlier this year, the country requires approximately US$1 trillion worth of infrastructure investment by 2018.

Trade between the UAE and India:
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 UAE also pledged US$2 billion of investments in Indian infrastructure earlier this year.

The UAE is India’s largest export market, accounting for just over 10% of total merchandise exports. The UAE is forecast to maintain this pre-eminent 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.

Trade between Saudi Arabia and India:
In 2012, approximately 25% of Saudi Arabian exports to India were oil and gas. Diversification means that the biggest growth in exports to India will be in chemicals, which will account for over 80% of total exports from Saudi Arabia 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 Arabia were just 2.9% of total exports in 2012. This share is expected to increase to 4% 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.

Trade between Egypt and India:
India was Egypt’s second biggest export market after the USA with 9% 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. 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% of the increase in exports from Egypt to India between 2013 and 2030.

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 and transport equipment and manufactures, together accounting for over 70% of this increase. India’s strengthening economy will also drive double-digit annual growth in its exports of infrastructure goods to Egypt.