May 2012

Alpen Capital's research paper - Trade and Capital Inflows between GCC and India analyses the development of bilateral trade (both merchandise and services) and investment capital flows over the last 10 years, thereby highlighting key attributes that have helped foster stronger economic cooperation between the two economies. It also covers the future growth potential of trade and capital flows between the two regions.

Economic relations between India and the GCC date back to several centuries. However, the two-way trade between the two regions has strengthened over the last decade. This is particularly due to the substantial economic power attained by these regions on the global map following the spectacular economic growth since 2003.FDI investment from GCC to India has picked up pace in the recent years but remains negligible relative to trade flows in terms of magnitude. It also represents just a small percentage of total FDI from GCC countries to the world.

With the economic forecasts pointing to strong GDP growth in both the economies, we emphasize that there is an ample scope of strengthening economic ties between GCC and India. While the GCC needs to promote more industrialization and SME participation in order to realize its diversification dream and create jobs for its rapidly expanding population, India needs to further improve its basic infrastructure and reduce complexity in the regulatory practices. We recommend GCC investors to further diversify their investment portfolio by taking positions in the promising Indian investment avenues as the return on investment remain relatively robust. At the same time, due to its locational advantage and abundance of natural resources, GCC has the potential to serve as a manufacturing base as well as an export hub for Indian companies.

For more details please click here to access the research paper.