Sector Overview
Manufacturing and industry represent the structural backbone of the UAE’s economic diversification programme. While real estate, tourism, and financial services command greater international visibility, the industrial sector is where the federation is building the productive capacity required to sustain long-term growth independent of hydrocarbon cycles. The sector contributes approximately 9 percent of GDP and employs around 500,000 workers across aluminium smelting, steel production, aerospace component manufacturing, petrochemicals, pharmaceuticals, food processing, and building materials.
The strategic framework is Operation 300bn, launched by the Ministry of Industry and Advanced Technology (MoIAT), which targets growing the industrial sector’s contribution from approximately AED 133 billion to AED 300 billion by 2031. This near-doubling requires expanding existing capacity, attracting new manufacturing investment, adopting advanced manufacturing technologies, and deepening supply chain localisation within the federation.
Key Players
Emirates Global Aluminium (EGA), jointly owned by Mubadala and the Investment Corporation of Dubai, is the UAE’s largest industrial company outside hydrocarbons and one of the world’s top aluminium producers, with annual output exceeding 2.5 million tonnes. STRATA Manufacturing, a Mubadala subsidiary based in Al Ain, produces aerostructure components for Airbus, Boeing, and other major OEMs, representing the UAE’s most advanced entry into global aerospace supply chains. Emirates Steel Arkan is the federation’s largest integrated steel manufacturer, operating electric arc furnaces and pioneering green steel production using hydrogen as a reducing agent. Julphar and Neopharma lead the pharmaceutical manufacturing segment. Agthia Group and NFPC dominate food processing.
Regulatory Environment
MoIAT oversees industrial policy, licensing, and the implementation of Operation 300bn. The Make it in the Emirates programme incentivises procurement from domestic manufacturers by government entities and large corporates. The National In-Country Value (ICV) programme requires a percentage of supply chain spending to be directed toward UAE-based companies, creating a protected demand base for locally manufactured goods. The Emirates Development Bank provides concessional financing and guarantees to industrial enterprises, with a mandate to deploy AED 30 billion over five years.
Free zones including KEZAD, Dubai Industrial City, and Sharjah’s SAIF Zone provide infrastructure, regulatory environments, and customs advantages tailored to manufacturing operations. The Industry 4.0 programme, coordinated by MoIAT, provides grants, technical assistance, and international benchmarking support to manufacturers adopting robotics, additive manufacturing, IoT, digital twins, and AI-driven production management systems.
Growth Drivers
Operation 300bn provides a comprehensive policy framework with measurable targets and financing mechanisms. The ICV programme creates guaranteed demand from government and quasi-government procurement. Industry 4.0 adoption, supported by MoIAT grants and technical assistance programmes, is improving productivity and enabling UAE manufacturers to compete on quality and efficiency rather than labour cost alone. The downstream integration of ADNOC’s petrochemical operations is creating feedstock and materials for plastics, polymers, and specialty chemicals manufacturing. Defence industrialisation under EDGE Group is generating demand for precision manufacturing, electronics, and advanced materials.
Challenges
High energy and labour costs relative to competing manufacturing centres in Asia and Eastern Europe constrain price competitiveness in commodity manufacturing. The domestic market, while affluent, is relatively small at approximately 10 million residents, requiring manufacturers to achieve export scale to justify capacity investments. Attracting and retaining skilled technical workers in manufacturing roles remains difficult given the labour market’s structural preference for services sector employment and the lifestyle expectations of the resident workforce.
Supply chain depth is still limited, with many manufacturers dependent on imported raw materials, components, and specialised equipment. The corporate tax regime, introduced at 9 percent in 2023, adds a new cost consideration for manufacturers previously accustomed to a zero-tax environment, though free zone exemptions partially mitigate this impact for export-oriented operations.
Vision 2031 Targets
The AED 300 billion industrial GDP target under Operation 300bn is the sector’s defining benchmark. Supporting objectives include increasing the proportion of high-technology manufacturing, deepening supply chain localisation, growing pharmaceutical self-sufficiency, expanding aerospace and defence manufacturing capabilities, and establishing the UAE as a regional hub for Industry 4.0 technology adoption.
Green manufacturing targets, including green steel and low-carbon aluminium production, align the industrial strategy with Net Zero 2050 commitments. The Emiratisation agenda within industry targets increasing the number of UAE nationals employed in manufacturing management, engineering, and technical roles, supported by vocational training programmes and graduate placement schemes.
Investment Outlook
The manufacturing sector offers investment opportunities across advanced materials, aerospace components, pharmaceutical production, food processing, and Industry 4.0 technology integration. Government procurement preferences under Make it in the Emirates and ICV programmes create reliable demand for locally manufactured goods. EGA’s green aluminium initiatives and Emirates Steel Arkan’s hydrogen-based steel production position the UAE at the forefront of sustainable industrial manufacturing, commanding premium pricing from European and Asian buyers seeking low-carbon construction materials and industrial inputs.
The pharmaceutical subsector presents particular opportunity as the UAE moves to reduce import dependency in medicines and active pharmaceutical ingredients. Defence manufacturing through EDGE Group subsidiaries is creating demand for precision engineering, unmanned systems components, and advanced electronics. The sector’s long-term trajectory depends on achieving export competitiveness in higher-value manufacturing segments and scaling the technical workforce required to operate increasingly automated production environments.