India-Middle East Food Corridor: Exploring The Potential
Embarking on a journey of flavours and economic cooperation, the India-Middle East food corridor emerges as a transformative initiative that holds the power to revolutionize trade and economic ties between India and the Middle East.
Bilateral Relations between India and the UAE
The India-UAE diplomatic ties have strengthened in recent years. Bilateral trade hit record levels in FY 22-23, surging from $ 72.9 Bn (FY 21-22) to $ 84.5 Bn (FY 22-23), with a remarkable 16% year-on-year growth rate. Key sectors include mineral fuels, electrical machinery, gems and jewellery and automobiles.
UAE is the 7th largest investor in India in terms of FDI, amounting to $ 3.35 Bn in FY 22-23. The Comprehensive Economic Partnership Agreement (CEPA) signed in Feb 2022 is acting as a growth engine for India-UAE bilateral trade and aims to boost trade further, targeting over $ 100 Bn in goods and over $ 15 Bn in services within five years.
India-Middle East food corridor: Origin
UAE has made significant investments in India in past years to build a food corridor and guarantee food security of the Emirates and other Middle Eastern countries. Multiple UAE-based companies including Emaar Group and DP World have been carrying out substantial investments for the construction of food parks and providing supply chain solutions in India.
On July 14, 2022, the inaugural “I2U2” summit witnessed the coming together of the heads of government from India, Israel, the UAE and the US. This historic event highlighted the concept of food corridor, indicating the formation of a US-sponsored "Middle-East squad." During the summit, the UAE made a significant announcement of $ 2 Bn investment towards the construction of food parks in India that will leverage advanced agritech, clean tech, and renewable energy technologies from Israel and the US.
Alongside India's collaboration with the UAE, Israel's agritech and clean tech partnerships are playing a pivotal role in supporting India's efforts to achieve its objectives. India has gained from Israeli expertise and technologies in horticulture mechanization, micro-irrigation and post-harvest management. Israeli drip irrigation technologies are now widely utilized in India. Additionally, Israeli companies and experts are contributing their knowledge to enhance dairy farming in India.
India-Middle East Food Corridor: The Vital Role of India
During the FY 2022-23, the UAE emerged as the second-largest importer of agricultural products from India, amounting to $ 1.9 Bn (6.9% of India's total agricultural exports during that period). Rice and wheat being the top items amounting to $ 486 Mn and $ 150 Mn respectively.
The UAE, which is heavily reliant on import of staple food items, has set the objective of achieving food access and supply chain crisis readiness. India, being the second-largest producer of food in the world, is a crucial ally in the UAE's attempts to improve food security. Moreover, given its advantageous location in the Gulf region, the UAE has the potential to serve as the logistical and distribution hub for the corridor.
By forging a strong alliance with India through this corridor, the UAE can mitigate the risks associated with food supply disruptions. This collaboration not only strengthens bilateral ties but also reinforces the shared commitment towards fostering regional stability and prosperity.
India’s Agricultural Advancements for Enhanced Food Production
Alongside the UAE's substantial investment of $ 2 Bn in the development of food parks in India, the Indian government has undertaken proactive measures to establish food parks and enhance trade relations with various nations. The Union Budget 2023-24 announced a substantial investment in Agriculture Accelerator Fund to encourage agri startups.
- The Ministry of Food Processing Industries has implemented the Mega Food Park Scheme (MFPS) to establish modern infrastructure along the entire value chain from farm to market in the food processing sector. As a part of this initiative, the Ministry granted approval to 41 Mega Food Park projects, out of which 24 are currently operational.
- Under the PMKSY (Pradhan Mantri Kisan Sampada Yojana), a comprehensive range of initiatives has been implemented across the country including the approval of 41 Mega Food Parks, 376 Cold Chain projects, 79 Agro-Processing Clusters, 482 proposals for the Creation/Expansion of Food Processing & Preservation Capacities (CEFPPC), 61 projects for the Creation of Backward and Forward Linkages, 46 Operation Green projects and 183 approved projects under Food Testing Laboratories out of which 140 projects are completed.
- In 2022, the Indian Government implemented a range of innovative initiatives like 558 unique identification systems, Kisan drones for crop evaluation, digitisation of land records and nutrient pesticide spraying.
The Indian agriculture and food processing sector hold immense potential for growth and development. With substantial government support and abundant arable land, the India-Middle East food corridor presents a remarkable opportunity for India to realize its goal of augmenting the value of food production.
UAE’s agritech sector has shown remarkable growth in recent years. Investments from venture capital firms in AgriTech startups in UAE were expected to exceed $ 500M by 2023. Fostering partnerships with UAE-based agritech startups like RightFarm, Madar Farms etc can also open new avenues for Indian startups to access advanced technologies and investment opportunities.
In conclusion, the India-Middle East food corridor represents a pivotal alliance between India and the UAE, driven by the shared goal of ensuring food security and fostering economic prosperity. With a rich history of bilateral relations and a pressing need to reduce dependence on food imports, the corridor has emerged as a promising solution. As India continues to invest in infrastructure development and the UAE commits substantial funding for food parks, the stage is set for a transformative collaboration.
The food corridor not only addresses the immediate challenges of food security but also paves the way for stronger regional ties, sustainable agriculture and a resilient future for both nations. Together, India and the UAE are poised to embark on a remarkable journey of shared growth, mutual prosperity, and a more secure food landscape for generations to come.
The blog has been co-authored by Sakshi Dokania.