Meanwhile, New Delhi said it was closely tracking the fallout of the Dubai financial crisis, which it believed would soon blow over. Overseas affairs minister Vayalar Ravi said directions have been given to Indian missions in the Gulf region to provide all necessary help to the vulnerable section of the Indian workforce.
Allaying fears of an exodus of its migrant workforce and large-scale job losses, Indias Consul General in Dubai, Venu Rajamony, said India is confident that the Dubai government was fully equipped to handle the short-term crisis faced by Dubai World, the state-owned investment holding firm.
The Prime Ministers economic advisory council chairman, C Rangarajan said on Sunday he didnt expect the Dubai crisis to trigger another meltdown in the world. The council retained its forecast of Indian economic growth rate to 6.5% for the current fiscal. I dont expect really a slip back as far as the economic recovery is concerned. Most countries in the West have shown positive growth in the third quarter of 2009 and this trend will continue. But as we all know recovery is going to be slow and modest, Rangarajan said. Probably, the West Asian countries would come to the rescue of Dubai, he added.
On its part, India Inc is keeping its fingers crossed, as events would begin to unfold in the emirates starting Monday after the holiday weekend. The debt problems in Dubai are having a cascading effect on most world markets. The markets were waiting for an excuse to correct themselves but the Dubai default fear gave the bears reason to step in.
The BSE benchmark Sensex on Friday lost 2.3% to close at 16,632, while NSE Nifty ended the week down 2.2% to shut shop at 4,942.
Indian companies say there would be no immediate impact, although some of them have already started measures to minimise any likely damage owing to their exposure to Dubai.
Binani Cement Ltd, which currently has 1.2 million tonne grinding unit in UAE, is feeling the pinch of pressure on prices in Dubai.
Vinod Juneja , MD of Binani Cement said, As far as Binani is concerned, we are not having any immediate impact of this Dubai crises on us. From the beginning, we have adopted the policy of cash-and-carry and hence we have no defaulters in payment. Yes, there is pressure on prices in Dubai which may impact profitability. But taking this into consideration we have started exporting to Abu Dhabi, Kuwait, Qatar and Sudan to minimise the impact. Binani is expanding its capacity to 2.0 million tonne in UAE.
According to Ravi Kant, vice-chairman, Tata Motors Ltd, As far as the Dubai market is concerned, we dont have large sales in the entire Middle-East region which accounts for less then 1% of our revenues. Yet, it is too early to comment on the situation.
Even for state-run refiner Bharat Petroleum Corporation Ltd (BPCL), the Dubai crisis does not hold any ramification at this time. Says an official from the company, The crisis is unlikely to have any impact on our imports at this stage. We import crude amongst other products from across the globe and Middle-East is one of them.
On November 25, the Dubai government had announced it would ask creditors for a standstill on debt worth billions of dollars of two of its flagship firms -- Dubai World, which runs 49 ports around the world, and real estate developer Nakheel.
Says Ashutosh Datar, Strategy Analyst, IIFL , While the full extent of damage should a default take place is unclear, in our view the concerns as reflected in market sell off over the past couple of days has been over done. After all, Dubai is just one small part of entire Middle East region.