UAE commences the procedure to invest $2 billion in food parks in India

The United Arab Emirates (UAE) has commenced the process of directing its long-promised $2 billion investments into food parks in India, with the initial focus on Gujarat. This comes after both countries addressed concerns related to restrictions imposed by the Essential Commodities Act (ECA), according to sources familiar with the matter.

The investments are part of the collaborative initiative known as I2U2 (India-Israel-UAE-USA), involving four nations aiming to establish integrated food parks across India. The primary objective is to enhance food security in the Middle East and South Asia.

As part of the resolution, India has agreed to waive ECA restrictions on a specified volume of commodities falling under the Act. These commodities are proposed to be processed and exported from the parks by investors. The UAE will determine the exact quantities at a later stage of development.

The first food park is anticipated to be established near Kandla, where investors will engage in contract farming arrangements with local communities. Discussions are ongoing with the State government for necessary permissions, and work is expected to commence soon, with investments planned in tranches.

The UAE initially pledged in 2018 to invest in Indian food parks, a commitment that later became part of the I2U2 initiative announced at the Leaders’ Summit in July 2022. This virtual summit included participation from Prime Minister Narendra Modi, U.S. President Joe Biden, former Israeli Prime Minister Yair Lapid, and UAE President Sheikh Mohamed bin Zayed Al Nahyan.

The food parks are envisioned to incorporate state-of-the-art climate-smart technologies, aiming to reduce food waste and spoilage, conserve fresh water, and rely on renewable energy sources. These goals are outlined in the joint statement signed by the leaders at the Summit.

One of the significant concerns for the UAE has been the Essential Commodities Act, as three shortlisted crops for processing in the food parks – onions, rice, and bananas – fall under the Act’s purview. The Act allows the government to impose stock-holding limits if a commodity is in short supply, potentially affecting business prospects in the food parks. With the recent agreement that the ECA will not apply to commodities processed in the food parks up to a specified quantity requested by the UAE, this issue has been successfully addressed, providing a positive outlook for the upcoming investments and collaborative efforts.