Indian business giants turn to RAK as gateway to enter GCC
A number of top Indian companies and entrepreneurs are now turning to Ras Al Khaimah in a big way. Why? The emirate in northern UAE is increasingly becoming an entry point to enter the Gulf Cooperation Council (GCC) and the rest of the Middle East, going by the latest figures released by the emirate’s free zones.
RAK—as the emirate is called—has two major designated free zones: RAK FTZ and RAKIA. Of late, both are reporting a huge jump in business from Indian companies and entrepreneurs of Indian origin. The past year alone witnessed a 52 per cent increase in business from Indian clients.
Last year, RAK FTZ reported a significant growth in the number of its active companies from 8,000 to more than 8,600 clients from over 100 countries and representing 50 plus industry sectors. Both RAK FTZ and RAKIA regularly hold roadshows across the Indian subcontinent to woo established and upcoming businesses to the emirate.
While RAK was previously only known as the best destination to set up a company in the GCC, the stature of the emirate as the new home for doing serious business is fast gaining traction. In addition, the success of established Indian brands in the emirate is leading to a steady stream of companies from as diverse industries as automotive to power generation, from healthcare to packaging, and from construction to aviation and manufacturing.
Indian giants such as leading commercial vehicle manufacturer Ashok Leyland, healthcare product-maker Dabur Naturelle, plastic packaging leader Eurocap and utilities major Utico Middle East believe that their presence in RAK is extremely important.
K M Mandanna, Vice President (Manufacturing) for Ashok Leyland UAE LLC, describes their operations in Ras Al Khaimah as a logical step to consolidate the company’s presence in the region and ensure faster response to their customer demands.
Ashok Leyland, the flagship brand of the Indian conglomerate Hinduja Group, is the world’s fourth largest commercial vehicle maker and recently announced an AED 36.5 million expansion of its RAK facility, where it doubled the assembly of buses from 12 to 24 buses a day. The company’s RAK factory is a joint venture with 2005-formed RAKIA and is the only certified local bus factory in the UAE and GCC region.
“We have enjoyed a considerable market presence in the entire GCC for almost up to 30 years. The UAE was a preferred country of choice in this region to establish a manufacturing facility,” Mandanna points out. “Ashok Leyland believed that establishing a plant in the region would ensure better understanding and faster response to the market, thereby delivering market requirements within the shortest development cycle times.”
“The most prominent reason for the selection of Ras Al Khaimah is certainly the business-friendly policies of the RAK government. Bearing in mind the significance of low operating costs to achieve our business viability, we identified and partnered with RAKIA, whose single window facility for licences, government approvals and immense support for operational resolutions has enabled Ashok Leyland (India) Limited to establish Ashok Leyland (UAE) LLC and commence operations within a short span of 15 months from the date of construction initiation,” he adds.
On the other hand, Jude Alex, Associate Manager (Human Resources), Dabur Naturelle, believes that RAK’s reputation for providing a business-friendly environment and competitive costs of establishing and operating companies are the major factors attracting businesses to the emirate. “These advantages allow companies in Ras Al Khaimah to maximise their return on investment. The political climate in RAK is safe and stable and the emirate offers high-quality affordable housing, shopping malls and plenty of family-focused activities,” he points out.
From its RAK facility, Dabur Naturelle is involved in the manufacture and distribution of personal care products, including perfumes, hair care, cosmetics and soaps. The company has been operating in the emirate since 2007 – a testament to its confidence in the market. “RAK is a veritable shrine to business and commerce, renowned for its efficient administration, infrastructure and sleek licencing. The emirate remains unequalled as one of the most sought-after and enticing places to flex your entrepreneurial muscles,” he advises.
Alex is also impressed by RAK government’s proactive attitude which encourages the concept of free enterprises to attract investment for the overall progress and development of the emirate. “Visionaries in the RAK Government have ensured very smooth and swift mode of government transactions which enabled ease of business, making it an entrepreneurial friendly zone. The comparative advantages of availability of land and relative ease in setting up business offers potential investors easy access to their respective markets,” he adds.
Richard Menezes, Executive Vice Chairman and Managing Director of Utico Middle East, believes that the wealth of opportunities in RAK and its neighbouring emirates, along with the close proximity to Oman, have positioned the emirate as an attractive investment destination. Utico is acknowledged as the GCC’s largest independent utilities provider which set up power generation and water desalination plants in RAK 10 years ago to provide utilities to the entire UAE.
“RAK promotes free enterprise with a stable government and has many opportunities for innovative business models and new technologies. It also has a good system to support businesses thrive and prosper with proper governance,” Menezes says. “In addition, RAK is part of UAE and its economy is linked with the other emirates. Its strategic location and focus on heavy industries like ceramics, cement, steel, glass, mining along with the largest dry bulk port in the Middle East gives it a unique position for its business potential and growth linked to these sectors and its support systems,” he adds.
Last year, Utico Middle East underlined RAK’s significance as an international business destination when it announced a joint venture with Spanish energy giant Grupo Cobra to construct an AED 719 million water desalination plant in Ras Al Khaimah. Once completed, the Al Hamra Water Company will generate 22 million gallons of water per day (MGD) to serve the needs of RAK and surrounding regions.
Companies such as Eurocap find that the emirate is the perfect destination for manufacturing companies. Eurocap, which manufactures injection-moulded plastic packaging items, specializing in caps and lids for perfume and cosmetic products, has launched full-scale operations in 2007 and continues to be one of RAK’s leading manufacturing companies. The company is a joint venture between Indian and French entrepreneurs.
Explains P Haridas, Manager-Administration and Sales at Eurocap, “We felt Ras Al Khaimah is a prime location for industrial investors considering the stable utility supplies, easy access to suppliers, which is very important and necessary for the day-to-day activities of a manufacturing unit like ours, a wide logistics network, and moreover, Ras Al Khaimah has a wonderful environment to work in”.
Geographical location is another key factor in RAK’s success as an investment destination. The emirate is strategically located between the Indian Subcontinent, Iran and Asia on one side and Europe, the Americas and Middle East on the other side. Plus, RAK is close to all emirates and connectivity by road is hardly 30 minutes from Sharjah and less than an hour from Dubai.
“The main reason that we chose to set up at RAK FTZ’s Technology Park was the convenience of the location, with logistical accessibility to both Sharjah and Dubai,” says Haridas.
“The geographic advantage to RAK is more in terms of availability of a large expanse of suitable land, with well-established required facilities,” explains Ashok Leyland’s Mandanna. “A dedicated power plant in the Al-Ghail Industrial area with adequate facility to support future expansion, easy connectivity to all UAE ports and faster approach to the airport, combined with world-class infrastructure and streamlined regulatory systems make regular business very convenient for Ashok Leyland. At the same time, RAK also ensures quality of life for its employees to attract more skilled manpower to the region.”
Mandanna singles out the ease of setting up and operating in Ras Al Khaimah as the biggest factors that attract Indian investors to the region. “When we began operations seven years ago, we were overwhelmed and at the same time apprehensive of the several processes in the system. However, all our concerns were addressed through a single window facility offered by RAKIA,” he says.
The RAK government’s continued investment to build world-class infrastructure and power facilities has led to seamless logistical and operational advantages for companies in the region.
“One such example which initially seemed a challenge is the electrical supply required for the manufacturing plant. This was soon addressed as RAKIA set up their power plant in Al Ghail Industrial area which is now being migrated to Federal Electrical & Water Authority (FEWA). This has helped Ashok Leyland in understanding and ensuring adherence to all business guidelines while liaising between us and the government to receive all necessary approvals to commence operations at the earliest,” Mandanna adds.
“As prominent importers and exporters of the region, our maximum interactions are with the Customs and Immigration departments of the Government. The support and cooperation that we have received from His Highness Sheikh Saud vin Saqr Al Qasimi, Supreme Council Member and Ruler of Ras Al Khaimah, and the government officials in getting this factory up and ensuring consistent, hassle-free running has been overwhelming. As Ashok Leyland plans to go global, it is our goal to make this a benchmark manufacturing facility in the world,” he says.
Setting up business in Ras Al Khaimah has become easier as the government continuously explores different ways to reduce paperwork and streamline operations. Through a single point for communications, investors can now set up their businesses in the emirate through hassle-free transactions and communications.