The Economic Environment of India and UAE: A Comparison

1. Introduction

The study is being conducted to determine the best alternative energy company that wishes to supply solar panels and windmills for the production of non-pollution electricity generation. The countries selected are India and UAE, the economic and financial environment of these countries will be assessed to determine the best company to choose as a partner for this endeavor.

2. Objectives of the Study

The study is basically an analysis of the current and future economic trends of both India and UAE to enable an informed selection of a partner. The objective is not only to identify which company is more financially viable but also to understand their vision, pestle analysis, ease of doing business, per capita income and so on. This will help us understand which country provides a more business friendly environment.

3. Description of the Two Countries

India: India is the world’s second most populous country with over 1.3 billion people, and it is projected to be the world’s most populous country by 2027. It is a federal republic governed under a parliamentary system and consists of 29 states and 7 union territories. Hindi and English are the official languages of the central government while there are 22 constitutionally recognized regional languages. Islam is the largest minority religion in India followed by Christianity, Sikhism, Buddhism and Zoroastrianism. India has a diversified economy with an estimated nominal GDP of $2.6 trillion and a per capita GDP of $1,941 making it the world’s sixth-largest economy by nominal GDP and the third-largest by purchasing power parity (PPP). Agriculture sector accounts for 17% of India’s GDP while service sector contributes to 53%. Some of the major industries in India include textiles, telecommunications, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery and software. India is one of the founding members of the United Nations and hosts nearly one million refugees mostly from neighboring countries such as Bangladesh, Pakistan and Sri Lanka.

UAE: The United Arab Emirates (UAE) is a sovereign state located in Western Asia on the southeastern coast of the Arabian Peninsula with a population of 9.5 million people as of 2019. It comprises seven emirates namely Abu Dhabi (which serves as the capital), Ajman, Fujairah, Sharjah, Dubai, Ras Al Khaimah and Umm Al Quwain. Islam is the official religion while Arabic is the official language but English is widely spoken as well. UAE has a federal presidential monarchy system of government headed by Emir Sheikh Khalifa bin Zayed Al Nahyan who wields executive authority while Federal National Council acts as an advisory body for him. UAE has a highly diversified economy with an estimated nominal GDP of $377 billion making it 19th largest in the world by nominal GDP while its per capita GDP was $40,828 in 2017 which ranks 4th globally according to World Bank data making it one of the richest countries in terms of per capita GDP. Petroleum and natural gas exports account for about 25% of UAE’s GDP while service sector such as tourism accounts for about 19%. Other important industries in UAE include construction, aluminum production, fishing and media etcetera. UAE hosts nearly 200 nationalities with Indians comprising about 30%of its population followed by Pakistanis at 12%. Emiratis make up only 19%of its population while Arabs constitute 6%.

4. Analysis of Economic Environment

In order to understand which company is more financially viable and which country provides a more business friendly environment, we will carry out an analysis of the economic environment of both India and UAE.

4. 1 India

The economic environment of India can be analyzed using various tools such as PESTEL Analysis, SWOT Analysis, etc.

PESTEL Analysis:

Political factors: The political factors in India are quite stable with a democratically elected government in place. The country has been politically stable for the past few years with no major upheavals. The recent elections saw the re-election of the incumbent Prime Minister Narendra Modi with an even stronger mandate. This provides a good business environment as there is policy stability and predictability.

Economic factors: The economy of India is quite diversified with agriculture, manufacturing and service sectors contributing to its GDP. The country has been witnessing a steady economic growth over the past few years and is projected to be one of the fastest growing economies in the world. The per capita income has also been increasing steadily and is currently at $1,941. This provides a good market for alternative energy companies as there is disposable income available to consumers.

Social factors: The social factors in India are quite diverse with a large population of over 1.3 billion people belonging to different religions, castes and creeds. However, the country is united by its Constitution which provides for equality of all citizens regardless of their social background. This provides a good business environment as there is social stability and harmony.

Technological factors: The technological infrastructure in India is quite developed with a large number of IT and BPO companies operating in the country. The internet penetration is also quite high at around 50% and is increasing steadily. This provides a good business environment as there is availability of skilled labor and infrastructure for businesses to operate smoothly.

Environmental factors: The environmental conditions in India are quite varied with different climatic conditions prevailing in different parts of the country. However, overall the environmental conditions are conducive for businesses to operate smoothly. There are also a number of regulations in place to protect the environment from pollution and degradation.

Legal factors: The legal framework in India is quite developed with a large number of laws and regulations governing different aspects of businesses. These laws are enforced by a number of institutions such as the judiciary, regulatory bodies, etc. This provides a good business environment as businesses can operate within the legal framework without any fear of legal action against them.

4. 2 UAE

The economic environment of UAE can be analyzed using various tools such as PESTEL Analysis, SWOT Analysis, etc.

PESTEL Analysis:
Political factors: The political factors in UAE are quite stable with a monarchy system of government in place headed by Emir Sheikh Khalifa bin Zayed Al Nahyan who wields executive authority while Federal National Council acts as an advisory body for him. There have been no major upheavals in recent years and the country has been politically stable providing a good business environment.

Economic factors: The economy of UAE is quite diversified with petroleum and natural gas exports accounting for about 25%of its GDP while service sector such as tourism accounts for about 19%. Other important industries in UAE include construction, aluminum production, fishing and media etcetera. The per capita GDP was $40,828 in 2017 which ranks 4th globally according to World Bank data making it one of the richest countries in terms of per capita GDP. This provides a good market for alternative energy companies as there is disposable income available to consumers.

Social factors: The social factors in UAE are quite diverse with a large number of expatriates from different countries residing in the country. However, the country is united by its Constitution which provides for equality of all citizens regardless of their social background. This provides a good business environment as there is social stability and harmony.

Technological factors: The technological infrastructure in UAE is quite developed with a large number of IT and BPO companies operating in the country. The internet penetration is also quite high at around 95% and is increasing steadily. This provides a good business environment as there is availability of skilled labor and infrastructure for businesses to operate smoothly.

Environmental factors: The environmental conditions in UAE are quite conducive for businesses to operate smoothly. There are a number of regulations in place to protect the environment from pollution and degradation.

Legal factors: The legal framework in UAE is quite developed with a large number of laws and regulations governing different aspects of businesses. These laws are enforced by a number of institutions such as the judiciary, regulatory bodies, etc. This provides a good business environment as businesses can operate within the legal framework without any fear of legal action against them.

5. Comparison and Contrast of India and UAE

The following table compares and contrasts the economic environment of India and UAE:

The following are the major differences between the economic environment of India and UAE:

– India is the world’s second most populous country with over 1.3 billion people while UAE has a population of only 9.5 million people.
– India has a diversified economy with agriculture, manufacturing and service sectors contributing to its GDP while UAE’s economy is mostly dependent on the oil and gas sector.
– The per capita income in India is $1,941 while in UAE it is $40,828.
– The internet penetration in India is 50% while in UAE it is 95%.
– The social conditions in India are quite diverse with different religions, castes and creeds while in UAE the social conditions are quite homogeneous.

6. Conclusion

Based on the above analysis, it can be concluded that UAE is a better option for an alternative energy company to supply solar panels and windmills for the production of non-pollution electricity generation than India. UAE provides a more business friendly environment with a stable political system, well-developed infrastructure, skilled labor force and a large market for alternative energy products.

FAQ

The economic environments of India and the UAE are both rapidly growing and diversifying. However, there are some key differences between the two. The UAE has a much more open economy, with less restrictions on foreign investment and trade. Additionally, the UAE has a much higher per capita income than India.

Both countries' economic environments have changed significantly over time. In particular, India's economy has liberalized considerably since the 1990s, while the UAE's economy has diversified away from its reliance on oil exports in recent years.

A number of factors have contributed to these changes in both countries' economic environments. In India, economic reforms and globalization have played a major role in opening up the economy and stimulating growth. In the UAE, a series of ambitious development plans have helped to diversify the economy away from its reliance on oil exports.

Businesses operate differently in each country's economic environment depending on the sector they are in and their size. Generally speaking, businesses in India face more regulations and restrictions than those in the UAE. However, there are also many opportunities for businesses to thrive in both countries' economies.

Businesses operating in either country's economic environment face challenges related to infrastructure, skilled labor shortages, and corruption . Additionally , businesses expanding into new markets may also face cultural barriers .

The UAE's Economic Zones Authority offers 100% ownership for foreign investors , which is not possible in India . Additionally , The Jebel Ali Free Zone ( JAFZA ) offers a 0% corporate tax rate for companies based there .

The similarities and differences between the two countries' economic environments have implications for businesses operating in both markets . For example , businesses expanding into new markets may find it easier to do so in the UAE due to its more open economy . However , businesses operating in India may benefit from its large population and growing middle class .