INDIAN INVESTMENT

Ras Al Khaimah | INDUSTRY | B2B

On opposite sides of the Arabian Sea, India and UAE industrial ties are growing in significance.

Mohit Malhotra
MOHIT MALHOTRA
Senior Executive Director & CEO
Dabur International
Tapas Ranjan Nayak
TAPAS RANJAN NAYAK
Plant Head
Ashok Leyland

What are the competitive advantages of being located in Ras Al Khaimah?

MOHIT MALHOTRA When we selected Ras Al Khaimah, we had evaluated all the Emirates and markets in and around the region since the UAE is our captive consumption market. We found that Ras Al Khaimah was commercially and financially beneficial, offering excellent ease of doing business in terms of how supportive the government is and how eager it is to get investments and business. It is a business-friendly, workforce-friendly, and regulatory-friendly environment. We had 15 parameters on which we evaluated all the Emirates, and Ras Al Khaimah turned out to be the best choice. It was an extremely attractive proposition. We have uninterrupted power and water supply. In addition, Ras Al Khaimah is the only area that allowed us to put up our own labor accommodations. Getting visas for workers is easy, and the Ras Al Khaimah government is approachable and fast to interact with through a fully online operation.

TAPAS RANJAN NAYAK The main benefit is that the government here is extremely business friendly. Furthermore, transport and the logistics system here, including customs, are excellent. Expansion of the port has begun and should be finalized soon. This will benefit us significantly by saving money and time on road transportation. Another benefit is the presence of local suppliers that help us increase our volumes. For example, several raw material suppliers for aluminum, steel, and glass are based in Ras Al Khaimah, and they are competitive in terms of quality and cost compared to suppliers in the GCC. Finally, energy prices have come down after the introduction of Federal Electricity and Water Authority (FEWA). There are challenges, though they are the same as elsewhere. Any manufacturing company in this industry needs a great deal of investment. When we started this plant in 2008, there were many challenges. That was because there was no manufacturing base for the automobile sector. There were already some companies in Saudi Arabia; however, we were the only original equipment manufacturers (OEM). When we started, 100% of our materials were brought in from India. The costs were high, and there was a 5% duty. Gradually, in the last five years, 80% of our bus components became locally sourced.

How competitive is the UAE for new players?

MM Looking at the MENA region, there is a big entry barrier for new players to enter. When a new player enters a market, it has to import goods into the region and, thus, has to pay import duties. Import duties in Saudi Arabia, North Africa, and Egypt are high, unlike in the UAE, where it is 5%. If a company produces here, it can avail AFTA benefit in the region for exports with no duty. In our case, we produce in Ras Al Khaimah and have invested in a facility. However, for a new entrant, investing in a factory is a huge entry cost and a barrier. If a company does not have a manufacturing facility in the region and does not add a value of greater than 40% to its produce in the region, it will not avail of the AFTA duty benefit and hence will have to pay additional 20-30% duty in the exporting country. For Dabur, this custom duty saving is passed on to consumers to bring down prices in the market, which makes us quite competitive.

How do you evaluate the business and trade relations between India and the UAE?

TRN Overall, there have always been excellent relations between the two countries. Moreover, since our Prime Minister signed an initiative on his last visit in 2018, the relationship will improve by the day. It is also easy to do business here compared to other parts of the world. In other places, the localization content is about 65%. However, here it is 20-40%.