Investors and corporates in India and across the Middle East, North Africa, and Türkiye (MENAT) are set for a decade of accelerated opportunity, according to a new report (pdf) by HSBC entitled India-MENAT Corridor Outlook: Harnessing Natural Synergies. The report considers the current state of trade and investment and the key growth opportunities between India and five countries in MENAT — Egypt, Qatar, Saudi Arabia, Türkiye, and the UAE.

“Buoyed by strong mutual interests, solid economic fundamentals, and enduring historical ties, corporates and investors are looking at an extensive set of opportunities in both directions,” said Regional Head of Commercial Banking, Middle East North Africa and Türkiye (MENAT) Patricia Gomes at HSBC Bank Middle East.

Indian corporates succeeding in the Middle East: The Middle East’s ambitious transformation plans and the region’s youthful demographics — more than half of whom are under 30 years of age — are attracting Indian investment. Data from the International Trade Centre and HSBC analysis show there is an estimated USD 61 bn export potential for India in­ key MENAT markets.

India’s increasing strength as a food and agricultural producer and exporter are re-positioning the India-GCC trade and investments relationship. Technological developments are transforming the GCC's food and agriculture industry, and considerable sums are being invested to promote food security. The India-UAE food corridor has seen over USD 7 bn of investment since plans were initiated in 2019.

The Indian diaspora in the GCC is deepening regional capital, talent, and technological ties. Around 8.8 mn non-resident Indians now reside in the GCC, and represent the largest real estate investors in Dubai, overtaking British expats.

Outside of the GCC, India continues to do lucrative business in new areas of the economy with the other countries in MENAT. In Egypt, Indian companies are investing in green hydrogen and electric vehicles, as well as in more traditional sectors such as food, chemicals, and tourism. India's automobile companies are also present in Türkiye, where Indian manufacturers have also invested heavily into the packaging materials industry.

MENAT corporates making inroads in India: India’s strong economic fundamentals are attracting MENAT corporates that are expanding their trading relationships overseas, with an estimated export potential of over USD 51 bn from key MENAT countries into India.

Understanding India's expansive physical landscape is also helping MENAT corporates narrow down their investments. Tier-1 cities are key drivers of India’s economic growth and just six of these eight cities contributed 28% of India’s GDP in 2022.

But don’t rule out India’s Tier-2 cities: “India’s Tier-2 cities have untapped potential for MENAT corporates considering lower operational costs, niches for specific industrial activities, or shifting ancillary operations,” Gomes said.

India’s place in the global economy is changing: While India is still a close trading partner for the MENAT region in goods such as spices, gold, and textiles, the South Asian country is also rising in global prominence in manufacturing, technology, and science. India’s digital economy presents multiple promising investment options for MENAT corporates, underpinned by strong growth forecasts from a 0.5% share of GDP in 2010 to 13% by 2030.

Trade agreements hold further promise: The trade and investment relationship between India and MENAT are set to increase also because of trade agreements like 2022’s India-UAE Comprehensive Economic Partnership Agreement (CEPA), which was negotiated and concluded in just 88 days, reducing or eliminating tariffs in over 80% of bilateral product lines. In addition to this, the India-Middle East-Europe Economic Corridor (IMEC) announced in September 2023, is a further trade proposal which would connect the Middle East and Europe to India by new rail and shipping links.

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