How can Indian FMCG Companies Use Dubai as Base for Global Expansion?

Indian fast-moving consumer goods (FMCG) companies are considering Dubai as a strategic hub for global expansion. For businesses based in India, companies are required to navigate complex taxation rules and bear high costs to export products across borders. Henceforth, leveraging Dubai as a base for export is the obvious choice.

Being a hub for business and entrepreneurship in the Middle East, Dubai offers unique advantages for companies aiming to export and re-export. Known for its world-class infrastructure, strategic location, and business-friendly environment, Dubai is an ideal location for businesses operating in sectors like finance, tourism, logistics, and technology. Dubai offers several trade agreements with various countries and establishing a base in Dubai can be highly beneficial for Indian FMCG firms seeking to access markets in the Middle East, Africa, and Europe.

Let’s delve into the intricacies of how Indian FMCG are using Dubai as a gateway for global expansion:

Indian FMCG Export Landscape

India is a major contributor in the global FMCG landscape. The nation exports a wide range of FMCG goods, demonstrating the richness and variety of its product line. Products like rice, tea, spices, and textiles are some of the popular export products. Indian FMCG items are in high demand worldwide, which supports the nation's economic growth.

Indian fast-moving consumer goods have made their way into important international markets. It's critical to comprehend the cultural preferences of customers in various geographic areas. For example, there may be a greater demand for Indian spices in some nations, while textiles might be sought after in others.

Owing to the presence of a substantial Indian diaspora in UAE and in Dubai particularly, makes it the most prominent deciding factor for Indian companies for establishing base in Dubai, as an entry point for expansion into the international market.

Why is Dubai a Lucrative Option for Indian FMCG Firms?

Considering that Indian FMCG companies, both start-ups and established ones, are eyeing Dubai for their initial phase of international expansion, it is mandatory to examine why Dubai serves as a lucrative option.

Incentives and Support Programs by UAE For Indian Companies

UAE offers a variety of incentives and support programs to the Indian companies looking to start business in the country. Specific options available for a company may depend on the type of business and location of the company.

• Free Trade Zones - The UAE has several free trade zones that offer tax exemptions, 100% foreign ownership, and other benefits to foreign investors. These zones are designed to attract foreign investment and promote economic growth.
• Investment Promotion and Protection Agreements (IPPAs) - UAE has signed several IPPAs with other countries, including India, to promote and protect foreign investment. These agreements provide for the protection of investors' rights and interests and help to reduce investment risks.
• Commercial Agencies Law – The law regulates the relationship between manufacturers and commercial agents in the country. It also provides protection of commercial agents' rights and interests and helps to promote a stable and transparent business environment.
• Support Services - UAE provides various support services to foreign investors, including legal and financial services, assistance with company registration and licensing, and support with visas and work permits.

These incentives and support programs help to create a favourable business environment for Indian FMCG companies in the UAE.

Bharat Mart: India’s Mega Venture in Dubai

Bharat Mart, expected to be operational by 2025, is a warehousing facility enabling Indian companies to trade in Dubai. The initiative was laid at the World Governments Summit 2024 in Dubai and will operate as a market and trading platform for Indian businesses in Dubai.

• Situated in the Jebel Ali Free Zone (Jafza), Bharat Mart will pose as a mega distribution hub for Indian businesses to trade domestically in the UAE and re-export to regional and global markets.
• It is anticipated that Bharat Mart will have 1,500 showrooms serving both retail and wholesale clients.
• More than 700,000 square feet of Grade A warehouse space will be available. In addition, the building will have meeting rooms, offices, and light industrial units.
• Owing to its proximity to the Jebel Ali Port (11 km), the largest seaport in the Middle East, and Al
• Maktoum International Airport (15 km), Bharat Mart seeks to create a seamless multimodal logistics solution for Indian exporters. Through the Jebel Ali ecosystem, traders will access direct connectivity to more than 150 maritime destinations and air links to over 300 cities.

Business Advantage for Indian Companies in Dubai

There are several advantages offered to Indian FMCG companies for operating their business in UAE.

• As per the World Bank, UAE is ranked 11th in terms of doing business. With a supportive legal structure for entrepreneurs, the government of UAE emphasises on reinforcing and ensuring sustainability of the business.
• The process of setting up a business in the country merely takes a few days. For Indians, establishing a business in UAE improves the overall rate of success. Due to the strategic location of UAE, Indian companies can get access to local markets of Middle East, Africa and Europe.
• Several other business opportunities like B2C, B2B and C2B trading are offered to Indian entrepreneurs.
• Indian investors are also granted long term residency and are eligible for the Golden Visa System.
• Indians are barred from paying any import-export duty, income, corporate or personal taxes in UAE.
• The country is also a member of the Gulf Cooperation Council (GCC) and has free trade agreements with several countries, including the United States, European Union, and China.
• The country is also a hub for re-exporting goods to other Middle Eastern and North African countries, making it an important trade and logistics hub for the region.

Expat Factor and Market Understanding

The United Nations Migration Report from 2017 estimates that there are 3.3 million Indian migrants living in the United Arab Emirates alone. This represents a significant portion of the country's population, estimated to be more than 27%.

• The Gulf region is frequently referred to as an extended market for Indian businesses looking to test their products with the south Asian community.
• Indian firms, especially in FMCG, when enter the Gulf market, typically commence by targeting the ethnic communities. This provides a base for expanding to an international and much wider consumer base.
• The cultural proximity between India and UAE makes it a favourable location owing to a general understanding of consumer practices, cultural nuances, and dietary habits. Indian FMCG companies can leverage this inherent commonality between the nations to create a space for themselves in the international market.

Starting a Business in Dubai

Indian FMCG firms are considering both manufacturing set-up adding local value as well as re-export of products. If you are looking to set up a business in Dubai, it is a relatively straightforward process that involves a few steps.

• The Department of Economic Development in the emirate where the business will be established can be approached in person for registration.
• Online digital platforms are also available that allow for the application of commercial licenses and company registration, with licenses typically issued within minutes of providing the necessary documents.
• Business owners can also apply for registration through legal offices or designated companies that offer business establishment services.

Note: There are two different processes of business set up in UAE. One process is for setting up a business in the UAE Mainland whereas the other process is to set up a business in a UAE Free Zone.

As an exporter, setting up business in a Free Zone would be beneficial and make more sense.

Here’s how you can establish a business in Dubai Free Zone:

• Apply Online or In Person - A business owner can apply online on Basher. It is a platform that streamlines the process of setting up a business in the UAE, allowing for company establishment in just 15 minutes. The platform consolidates the various government agencies responsible for licensing economic activities, making it easier to conduct business in the country. Business owner may apply in person by visiting one of the following offices - Government service centres, Tasheel offices, OnTime offices for government services, legal services offices or customer happiness centres affiliated to the departments of economic development in all emirates of the country.
• Determine the Nature of Business Activity - UAE free zones provide various kinds of business licenses to investors and entrepreneurs, which depend on the type of business they plan to operate. Some of them are media, offshore, commercial trade, industrial, warehousing, manufacturing, innovation, and ecommerce.
• Determine your Company’s Legal Structure - The legal framework of a company is determined by its specific needs and characteristics and establishes the legal obligations and regulations that the company must comply with.
• Register the Trade Name - A trade name is the unique name of a company that distinguishes it from other registered companies. To obtain a trade name, applicants can submit an application through the relevant Department of Economic Development's website or smart application.
• Select Business Space and Location - You can select from over 30 free zones in Dubai to establish your new company that aligns with the type of business activity.
• Obtain the Initial Approval - To establish a new company, it is mandatory to fulfil all the requirements and submit the necessary documents to obtain initial approval. Certain business activities such as tourism, travel, and health may require additional approvals from relevant authorities. Some of the documents required by companies are business plan, completed application form, existing trade license, title deeds passport copies of all shareholders, certificate of reference from a bank etc.
• Registration and Payment of Fee – Pay the required fee to secure the company license.  

Conclusion

Dubai has emerged as a lucrative base for Indian FMCG companies seeking to expand their horizons globally. With a strategic location, solid infrastructures, supportive legal structure, and a robust trade culture, Dubai stands as one of the most favourable spots for export and re-exports business on global scale. Furthermore, the UAE has stable trading relations both within the Middle East and globally, making it one of easiest countries in the world to do business with and Indian FMCG companies can leverage these qualities to delve into the global market.

We can assist you in setting up your business in Dubai for global expansion. You can get in touch with us by submitting a query below.