The UAE has initiated the process of directing its long-promised $2 billion investments into food parks in India, starting with Gujarat. This comes after the two countries resolved concerns related to restrictions imposed by the Essential Commodities Act, according to sources.
The investments are part of the four-nation I2U2 (India-Israel-UAE-USA) initiative aimed at establishing a network of integrated food parks across India. The goal is to bolster food security in the Middle East and South Asia.
“India has agreed to waive ECA curbs for a specified volume of commodities (coming under the ambit of the Act) that would be proposed to be processed and exported from the parks by the investors. The UAE will specify the quantities at a later stage of development,” shared a source closely monitoring the situation.
The first food park is expected to be established on land near Kandla, where investors will engage in contract farming arrangements with local communities.
“The UAE is in talks with the State government for various permissions and work is expected to start soon. The investments will be made in tranches,” the source added.
The UAE pledged its initial commitment in 2018 to invest in food parks in India. This commitment was subsequently integrated into the I2U2 initiative, which was unveiled at the Leaders’ Summit in July 2022. The summit saw virtual participation from Prime Minister Narendra Modi, US President Joe Biden, former Israeli Prime Minister Yair Lapid, and UAE President Sheikh Mohamed bin Zayed Al Nahyan.
According to the joint statement signed during the Summit, these food parks are set to integrate cutting-edge climate-smart technologies. The aim is to minimize food waste and spoilage, preserve fresh water, and utilise renewable energy sources.
The UAE has expressed concern regarding the Essential Commodities Act (ECA) as three of the identified crops for processing in the food parks—onions, rice, and bananas—are encompassed by the Act. As the ECA empowers the government to impose stock-holding limits in the event of a shortage of a particular commodity, this could potentially impact the business outlook for the food parks.
“Now that the Centre has agreed that ECA would not apply on commodities processed in the food parks up to a certain quantity requested by the UAE, the problem has been sorted out,” the source said.
