It is good to note that the proposed India-UAE food corridor has already roped in a third partner, Israel. The project is expected to eventually involve the United States as well. The US was a key initiator of the historic four-nation I2U2 virtual summit in July 2022 bringing together leaders of India, Israel, the UAE and the US to promote joint investment in food, water, energy, transportation, health, and space. The complex tri-nation food corridor requires the commitment and cooperation of all the partners and other related stakeholders as well. The corridor promises to contribute significantly to food security for the three countries and serve as a model for similar initiatives globally. The US is expected to benefit from its participation in the corridor as the country looks to bolster its strategic presence in Asia.
India has to work hard to fulfil its ambition to become the food basket for West Asia and beyond. In 2022-23, India’s agricultural exports were worth US$53.1 billion. A large part of the earnings came from West Asia. India’s major farm exports to the United Arab Emirates included food items such as cereals, sugar, fruits, vegetables, tea, meat, and seafood. India is the world’s eighth largest exporter of agri-based products. The exports of fresh fruits, processed vegetables, basmati rice, bananas, lentils (dried and shelled), fresh eggs, kesar and mangoes showed a substantial increase last year.
India needs to raise the ability to increase its agricultural yield and carefully manage its water resources. Alongside India’s engagement with the UAE to launch a robust food corridor, Israel’s agri-tech partnership is providing pivotal support to India to make the food corridor a success. Israel has contributed significantly to set up more than two dozen agricultural centres of excellence in the country, offering technology transfer and ushering in best practices. In 2019 alone, some 1,50,000 Indian farmers received training in these centres. Israeli agricultural companies played a transformative role in the Indian farming and water management sectors.
The success of the proposed food corridor with the UAE and Israel can potentially change India’s foreign trade profile with the country’s trade deficits rising year after year, which are partly responsible for the value erosion of its domestic currency, Rupee, and rising inflation. Of the country’s top ten bilateral trading partners – China, the US, the UAE, Russia, Saudi Arabia, Singapore, South Korea, Hong Kong, Indonesia and Iraq – India has a trade deficit with as many as nine countries. The only exception is the US, the country’s second largest trading partner, with a two-way trade of $118.28 billion in 2023-24. India had a trade surplus of $36.74 billion with the US. China is India’s largest trading partner, with a two-way trade of $118.4 billion in 2023-24. India had a trade deficit of $85 billion with China. The UAE is the third largest trading partner with a trade of $83.6 billion, last year. In 2023, India’s exports to the UAE were valued at $31.60 billion. The food corridor could change India’s trading dynamics. It can create new trade opportunities for the partner countries.
Last week, India and the UAE held their second meeting of the joint committee under the Comprehensive Economic Partnership Agreement. An official statement from India’s commerce and industry ministry said the two countries are on track to achieve a significant milestone of $100 million in non-oil trade by 2030. That is highly encouraging. The projection does not include the possible fallout of the proposed food corridor between the two countries. The corridor could create a more reliable and diversified source of food for the UAE. It will vastly enhance food processing facilities in India and ensure the availability of high-quality products for sale in the UAE and beyond, creating new trade opportunities for the partner countries. Eventually, it will also help the existing India-West Asia-Europe economic corridor reduce transit times and logistics costs by connecting India’s Arabian Sea coast to the UAE’s ports.
India and the UAE had fostered cooperation through a massive US$7-billion food security corridor, signed on February 18, 2022, on the sidelines of the Comprehensive Economic Partnership Agreement (CEPA) during the virtual summit. The agreement came into force on May 1, 2022. The food corridor is an initiative to connect Indian farms directly to the UAE ports throughout the food production value chain. The corridor’s economic logic is strong. India is a major exporter of farm products while the UAE meets nearly 90 percent of its food demand through imports. The food corridor could soon help triple the food and agri-products trade between the two countries.
However, the partners in the proposed food corridor need to work fast to make the project successfully operative by 2030. This will open up new business partnerships and create a regional food supply chain. The UAE plans to invest over $2 billion by 2027 to create food parks and processing facilities in India. Indian farmers will be a big beneficiary of the initiative while the corridor is expected to help address food security challenges in the region by creating a food supply network. Potentially, the corridor could provide an alternative to global supply chains. Although the UAE first promised to invest in food parks in India way back in 2018, nothing much has materialised so far. A small working group made up of the central government, state governments, and the UAE are supposed to oversee the establishment of the food parks. Unfortunately, the working group does seem to be working fast enough to achieve the goal for reasons best known to itself. (IPA Service)