In tandem with UAE's recent business reforms on local partnership, new decision will boost FDI flow and spur a new wave of Indian businesses in Dubai.
With its historic decision of granting citizenship to foreign investors, professionals and talented artists, the UAE has opened the gateway to one of the world's highest-ranked passports - and also a consolidation of investments from Indian expats.
Since Indian expats account for the largest single demographic in Dubai and comprise roughly 30 percent of the UAE population, the move represents a lucrative opportunity for Indian investors and professionals to settle down in one of the world's most attractive cities, thereby inducing more investments from the community.
India consistently ranks among the top five countries in terms of Foreign Direct Investment (FDI) into the UAE and Dubai, with government officials observing that India was the second-largest investor in Dubai in terms of FDI capital and the fourth largest in terms of projects during the first 9 months of 2019.
But it's also a two-way street for investments, as the historic bilateral relationship between India and UAE have strengthened in the past few years to blossom into a comprehensive strategic partnership supported by a robust flow of investments to both countries.
The UAE is India's third largest trade partner with a bilateral trade of about $60 billion. Apart from being a major exporter of crude oil to India, the UAE is investing in key sectors of the Indian economy such as infrastructure which includes logistics, food parks, highways, ports, airports, renewable energy and defence.
The decision to allow citizenship for foreigners "is on expected lines and is in tune with other progressive steps the UAE has been taking,” said R. Pattabhiraman, a Dubai-based financial data analyst. "I feel Dubai would greatly benefit from this exercise, since it is the most attractive city to settle down, live, work and do business. I am sure this opportunity would be seized by a number of Indian investors and professionals, especially those who have made the UAE their home for decades," he told Economic Times.
According to the UAE government, the UAE passport - which is ranked as one of the best in the world for mobility and visa-free travel to other countries - will be offered to select foreigners and professionals including “investors, doctors, specialists, inventors, scientists, talents, intellectuals, artists and their families”.
"The step aims at appreciating the talents and competencies present in the UAE and attracting more bright minds to the Emirati community in a way that contributes to the development and prosperity of the country," state news agency WAM said.
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Nearly 90% of the UAE’s roughly 10 million inhabitants are foreign nationals, and prominent Indian expat business captains based in the UAE - such as Lulu's Yousuf Ali MA, Thumbay Moideen, Dr Azad Moopen, Founder Chairman and Managing Director Aster DM Healthcare; Rizwan Sajan of Danube, and educationist Sunny Varkey, have all hailed the new decision.
Seen in conjunction with the UAE's recent move to abolish the clause on local partnership in key business sectors and a law on remote working for professionals, the resultant business environment in the country is likely to spur a whole new wave of Lulus, Asters, Landmarks and Sobhas - successful companies set up by Indians in the UAE.
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“The pathway to citizenship for expatriates is a transformative development for the future,” Taufiq Rahim, a Dubai-based senior fellow in the international security program at the New America think tank, told CNBC. “The announcement broke the barrier on an issue that was previously taboo and in the long-term will spur greater investment in the UAE,” he said.
The development is also being seen as a positive for new Indian businesses and start-ups looking for a hassle-free destination for FDI, backed up by top-quality ease of doing business.
“This decision will naturally pave the way for many Indian investors to look at UAE seriously for setting up operations there,” Ashok Jha, former Indian finance secretary and a leading policy expert, told Arabian Business. “This will also lead to many investors – Indian as well as global investors who may have been holding back their plans - to have a second look at investing in the UAE,” he said.