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Dubai – India: Commodities Trade Corridor September 27, 2014

Dubai – India: Commodities Trade Corridor September 27, 2014. Content. Trade Corridor – What does it mean & What is the need India and Dubai – Brief History in Commodity trade Current scenario in Commodity Trade India Dubai Trade Corridor – How to access the potential.

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Dubai – India: Commodities Trade Corridor September 27, 2014

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  1. Dubai – India: Commodities Trade CorridorSeptember 27, 2014

  2. Content • Trade Corridor – What does it mean & What is the need • India and Dubai – Brief History in Commodity trade • Current scenario in Commodity Trade • India Dubai Trade Corridor – How to access the potential

  3. Trade Corridor - What does it mean & What is the need

  4. Trade Corridor - meaning Trade corridors are streams of products, services, and information moving within and through communities in geographic patterns according to a matrix or culture of trade agreements and treaties, statutes, delegated legislation and customs that govern and guide trading relationships, institutions and structures* * Continental1.org

  5. Trade Corridor – Why is it required Because we don’t live in silos Early phase for commodity production in Less Developed Country (LDC) • Farmer in LDC – No access to markets, Limited value addition (Sorting, Grading etc.), Low scale etc. • Trader in LDC – Aggregator, Primary value addition • Trader sitting in Relatively Developed Country (RDC) – Financier, Re-exporter, Big wholesale, Low capital cost, large balance sheet, Distributor to end consumption country, Linkages, Research, Understanding of relevant laws in producer and consumer countries

  6. Trade Corridor – Provision for effeciency • Assumptions: • Natural demand supply will lead to trade • Government will take care of infra in-efficiencies • Regulations will be in line with what farmers/ trading community/ country needs • Market will take care of trade inefficiencies There has to be a concerted effort to provide all these facilities with consistency which involves Governments, regulators, services, operations staff and private entities to follow the same philosophy and execute efficiently

  7. Trade Corridor – Effeciencies • Requirements for LDC to grow • Road connectivity • Warehouses • Quality testing agencies • Spot market Infrastructure • Aggregation • Liquid futures market infrastructure • Transportation • Ancillary service providers (Grading, packing, labour providers etc.) • Shipping • Banking • End to end connectivity for commodity flow to consumer location • Etc. etc. etc. • What about regulations?

  8. 2. India and Dubai – Brief History in Commodity trade

  9. India and Dubai – Historical link • Since 3000BC India and 7 emirates under UAE have shared great cultural and trade relations • Part of natural trade route from Europe to India • Large barter trade with clothes & spices from India and pearls & Dates from UAE • Indian Rupee was extensively used in Dubai, Oman, Qatar, Bahrain and other states/emirates in Persian gulf and Arab peninsula till 1959 • In 1959 Indian Government introduced Gulf rupee to check overseas usage of rupee • In 1966 India devalued its currency leading to all trucial states shifting from use of Rupee to other currencies • Reasons: • Trucial states were primarily a transit point or re-export hub for trade from/to India • Indians captured major non-oil trade (Pearl, Gold, Agriculture etc.) • The natural trade was with India (pearls) • UAE as a country emerged in 1971 when British government cancelled their agreement to administer and protect trucial states

  10. India and Dubai – Historical link • Indians are the largest trading group in UAE since long • Indians historically handled all major non oil trades in emirates (pearls, bullion etc.) • Indians are a big investor in real estate in property and other sectors • Some of the biggest names in various sectors are Indians (Landmark Group, Jumbo Group, Gems Education, Jashanmal Group, Joyalukas Jewellery, Aster DM Healthcare, Dubai Pearl) • Dubai has established itself as a trading centre and re-export hub for various agricultural products like, spices, sugar, wheat, rice, tea etc.

  11. 3. Current Scenario

  12. Contribution of India and Indians in UAE https://www.zawya.com – Book “The Visionaries”

  13. Trade with Dubai – Current Scenario • Primary trade items with UAE • Natural or cultures pearls, Imitation jewellery, Coins, Precious and semi precious stones, Bullion • Iron and Steel; Articles of Iron and steel • Textiles & Apparels • Cereals • Mineral Fuels, Mineral Oils, distillates • Electric machines • Ships and Boats • Animal and Vegetable fats • Sugar and Sugar confectionary

  14. Trade with Dubai – Current Scenario • With peak of over USD 75 Billion in 2012-13 bilateral trade between India and UAE has gone down by 21% to USD 59.6 Billion in 2013-14 • Biggest drop is due to reduced trade in bullion (reason cited is increased import duty for gold and silver in India) • India expected to regain the top slot for being UAE’s biggest trade partner as Dubai leverages its infrastructure and strategic location to raise its status as regional hub for trade* * HSBC Trade Forecast report

  15. 4. India Dubai Trade Corridor – How to access the potential

  16. Why Dubai • Geographical Location • Political stability • Robust legal and regulatory framework • World class infrastructure and integrated services (Jebel Ali Port, Dubai International airport, good roads infra, warehousing etc.) • In top 5 physically safe countries in the world • By far highest ranking for human rights in the region & Good ranking globally (14th) • High rank in global financial safety rankings • Availability of best talents in the region • Good Investment opportunities in the country • No taxes on business or personal income • Dirham is pegged to USD • Pro business environment • Good social life with a lot of recreational options • No trade barriers

  17. Dubai - DMCC • Dubai Multi Commodity Centre (DMCC) was established by Government of Dubai in 2002 to enhance commodity trade flows through Dubai by providing physical, market and financial infrastructure • DMCC is the largest free zone with more than 9000 companies licensed under it • Provides in house visa issuance and government related services • 100% foreign ownership • Full capital repatriation • 0% corporate and personal tax for 50 years • Plug and play office solutions • Trainings on latest developments in global trade regulations and compliance standards • Provides amazing platforms to trade

  18. Dubai - DMCC • Exchanges and Commodity Services • Dubai Gold & Commodity Exchange • DMCC Pearl Exchange (Pearl Auctions) • Dubai Diamond Exchange (Diamond Auction) • Dubai Good Delivery (Certification of conflict free gold) • DMCC Tea Centre (biggest re-export centre for tea in world) • DMCC Trade Flow • The Kimberly Process Certification Scheme

  19. Dubai Gold & Commodity Exchange (DGCX) • The Dubai Gold & Commodities Exchange, (DGCX) is one of five financial exchanges in the UAE. • DGCX is majority owned by the Dubai Multi Commodities Centre (DMCC), an entity of the Government of Dubai. • Established in November 2005, DGCX offers derivatives futures and options contracts in Precious Metals, Base Metals, Currencies, Energy, Equity Indices and Soft Commodities. • DGCX is an SRO (Self Regulated Organization) regulated by the Securities & Commodities Authority (SCA) of the UAE. • Clearing is provided by the Dubai Commodities Clearing Corporation (DCCC), a wholly-owned subsidiary of DGCX. • In March 2013, DGCX migrated to an industry leading exchange platform called EOS powered by Cinnober, the leading exchange technology provider. • DGCX today has a membership base of over 250 members with 84 clearing members.

  20. Global Trading Lines

  21. Awards • Emerging Exchange of the Year Award for 2014 & 2013 by FOW. • Best technology Innovation by an Exchange Award 2013 by FOW. • Runner-Up for the Asian Exchange of the Year 2013 by FOW. • Exchange of the Year 2013 by Global Investor/ISF (Euromoney). • Middle East Best FX Exchange 2012, 2013 and 2014 by MENA Forex. • Best Global Commodities Exchange 2012 & 2013 by GBFR. • FOW Contract of the Year 2012. • FOW 2nd Fastest Growing Exchange 2012.

  22. Product Philosophy • Central location • Infrastructure • Open to global participants • Asia resurgence

  23. Current Product Groups • Currencies: • INR/USD Futures including the 12 month curve. • Mini INR/USD Futures. • G6 / USD Futures. • INR/USD Options. • Hydrocarbons: • Polypropylene Futures. • WTI Crude Oil Futures. • Commodities: • Gold Futures. • Silver Futures. • Copper Futures. • Equities: • S&P BSE SENSEX Futures.

  24. Future Product Pipeline in Agriculture • Soybean Oil • Black Pepper.

  25. Thank You

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