‘India, UAE to connect power grids’

He pointed out that with the interconnection of electricity supplies, all the six member states of the Gulf Cooperation Council grouping will get connected to India, promoting interdependence. Sudhir also said that post the India-UAE free trade agreement, bilateral trade has grown by nearly 30% in the April-November period, and that buyer-seller meets were being organized for sectors including engineering, food, gold jewellery, electronics, etc to encourage growth of non-oil trade. Edited excerpts:

Eight months after the comprehensive economic partnership agreement (CEPA), how do you assess its impact on bilateral trade between India and the UAE?

As far as bilateral trade is concerned, we were always doing well. So, even before CEPA, the UAE was our third largest trading partner and second largest export destination. We were their second largest trade partner and also, we are already there on the top.

What has happened after CEPA is that this trade has got a further push. CEPA entered into force on the first of May. After the benefits start, then also it takes a month or two for business communities on both sides to start taking advantage of that. It takes a little time. So, in the last six to eight months, there’s been a real push for several sectors. Our bilateral trade has shot up by nearly 30% already. And as the awareness grows and people become more used to Certificates of Origin and other little paperwork associated with using benefits under CEPA, trade will further increase. Exports to the UAE have grown by nearly 19%in the last eight months. These are very impressive figures.

Data for April-November period show that the trade deficit has also widened to $16.1 billion compared to $10.3 billion in the corresponding period last year. Even the non-oil trade deficit seems to have marginally widened. Is that concerning?

I will go into the reasons. The trade deficit has widened largely because of higher oil prices. Last year, prices were much lower. But after the Ukraine war, prices spiked and one of our major imports is oil. So that’s the reason. However, we can see that the crude LPG that we are importing from the UAE, we are re-exporting half of that in terms of finished products to the UAE.

It’s contrary to intuition that oil and gas trade flows only one way. I think our imports have been about $10 billion, but our exports have been worth $5 billion.

Our non-oil exports haven’t grown as fast as the overall trade. Non-oil exports in the April-November period have grown by around 5%, and imports by 10%. What can be the way forward?

In non-oil, engineering exports have gone up, gold has gone up, pharma too has shown a high double-digit growth. So, things are happening gradually. We are doing a lot of buyer-seller meets on focused sectors. We started with gold jewellery, then we moved to engineering goods, electronics, and now we will be focussing on food. In the next six-seven months, we will have covered all the important HSN codes. We will be participating in the Gulfood F&B exhibition in a major way. We are basically trying to have a multi-pronged approach to buyer-seller meets, but at the same time, take full advantage of all the exhibitions that happen here.

This country is a big hub for exhibitions and shows. So, we are trying to mount as big a delegation as possible. We are also trying to give a major presence to millets because this is the year of the millets and for India, millets are important. We will also introduce millet cuisine in several restaurants and do a special roadshow. What has been the progress on the power grid transmission line between India and the UAE? India’s power minister said the countries are close to a major agreement. When will that come up and can you share details of the proposed project?

There was a discussion on that when our minister of power R.K. Singh was here a few days ago. He had a very good meeting with the UAE energy minister Suhail al-Mazrouei. The idea we’re working on is to have a sub-sea cable connecting the UAE and India.

So, if that were to happen, then actually the whole of GCC gets connected to India. India is a huge market. GCC already has its grid and this grid is working; so, the moment we just connect this grid, we’re actually connecting to all these countries. So, that is the plan and for that, we are planning to launch a feasibility study, which we will announce in the next 15 days. It’s not been done so far but we’re not very far from it. Prime Minister Narendra Modi had given this mission of One World, One Sun, One Grid (OSOWOG). So, there the idea was that, let’s all make clean power, and share it as the sun moves. And if we connect our grids East and West of India, then we are doing that kind of trade. In India also, we are developing that capacity of having grids operated at much higher voltages. So, we have already gone up to 800 KV. We are now experimenting with 1200 KV so as to reduce the losses.

A consortium of Indian oil companies led by ONGC Videsh Ltd (OVL) is in talks to buy a stake in a hydrocarbon carbon assets of Abu Dhabi National Oil Co and the discussions are being facilitated through G2G talks. By when is that deal expected to be completed and what may be the size of the deal?

ONGC Videsh as part of a consortium with IOCL and BPRL already has a 10% stake in Lower Zakum and this deal was signed in 2018. Our companies are always very open to picking up more stake as and when the opportunity comes through. Two of our companies IOCL and BPRL are also doing exploration work in Area 1 of Abu Dhabi.

How far have talks progressed on the rupee-dirham trade settlement? When do we expect an agreement on that?

India had shared a concept paper with the UAE in November. Now, the discussions have gone far beyond the concept paper. The RBI is in active consultation with the UAE central bank and they are discussing that matter.

Technical discussions are happening. We feel that an INR-AED mechanism will help trade, bring down transaction cost and de-risk a lot of transactions. What we have in mind is to do it as soon as possible. It has to be a robust mechanism. It will be done in a graduated way, where we open up a few banks on both sides and then expand.

Our central banks are discussing and I will leave it at that.