Rarely a day goes by without an announcement on the upward trajectory of India's growth, or the new plans the country has to transform itself into one of the biggest economic powerhouses on a global scale.

More recently we have seen plans put into place to open up its financial markets in order to create a new global financial hub with the Reserve Bank of India (RBI) relaxing some foreign exchange trading norms and the Indian capital markets regulator Securities and Exchange Board of India (Sebi) seen approving rules around setting up stock exchanges and other capital markets infrastructure in India's financial centres, starting with Gujarat International Finance Tech-city, also known as Gift City.

Some are questioning whether this, taken in conjunction with the already advanced legal frameworks surrounding the financial services industry in India, could see India challenge Dubai as a global hub for financial services in the region.

India's financial markets are well established with debt and capital markets offerings, and the legal framework that underpins those markets is also strong and well developed. In comparison, Dubai's system and the laws underpinning it are more elementary but nonetheless, Dubai remains an extremely attractive financial market for Indian banks and I have no reason to believe that India opening up its markets in this way will be to the detriment of Dubai. I work closely with a lot of Indian banks which have long-standing operations in the UAE, and they see Dubai as a very separate market with a distinct host of growth opportunities for them.

Indian banks benefit from the fact that there are an estimated two million Indian expats living and working in the UAE who they can sell their retail and corporate banking services and products to, and historically they have benefited from the close ties between the two countries which has seen trade between India and the UAE grow from around $180 million a year in the 1970s to an estimated $75 billion today. Yet more than this, the Indian banks have been keen to exploit lending opportunities in specific sectors where a continuous stream of investment is required — specifically hospitality (which is an increasingly important industry in the run up to the Expo 2020), infrastructure and medical services where Dubai is building a new market from scratch. Commodities and projects are also a secondary focus for them, demonstrating that these banks have a diverse lending portfolio and that they are plugged into many of the established and emerging industries in the UAE — thus there is no incentive for them to pull out of Dubai as some of their Western counterparts have been doing recently (which is allowing local banks to begin to gain market share as a result).

Many of the Indian banks have secured or are applying for their licences in the DIFC and onshore Dubai, again in stark contrast to their Western counterparts. A lot of them looking for full banking licenses which allow banks to carry out all of the regulated financial services activities (ranging from providing credit to carrying out contracts of insurance and providing Trust services) in the DIFC free zone — again, demonstrating their comprehensive integration with the international business community operating within Dubai.

Against this backdrop, the changes to the Indian system must be viewed as a domestic opportunity for Indian banks as well as the existing opportunity that the Dubai market offers them as a foreign jurisdiction. The main trend in Dubai for Indian banks is one of growth — they are conducting more transactions and new ones are looking to expand their reach in the region by applying for licences here. While the market opening up in India will be welcomed by the Indian banks, this is unlikely to have a negative impact on their presence in Dubai — which will remain for the long term.

The writer is a senior associate at Galadari Advocates and Legal Consultants. Views expressed by her do not reflect the newspaper's policy.

Originally published in the 26 April 2015 edition of Khaleej Times http://www.khaleejtimes.com/kt-article-display-1.asp?section=opinionanalysis&xfile=data/opinionanalysis/2015/april/opinionanalysis_april19.xml

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