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The UAE’s foreign direct investment (FDI) in India jumped more than three-fold to $3.35 billion in the last fiscal year from $1.03 billion in 2021-22, data from the Department for Promotion of Industry and Internal Trade (DPIIT) showed.
The UAE was the fourth largest investor in India in 2022-23 and ranked seventh in 2021-22.
Singapore is India’s largest investor with $17.2 billion in FY23, followed by Mauritius ($6.1 billion) and the United States ($6 billion).
“The rapid strengthening of bilateral relations and investment cooperation between India and the United Arab Emirates is mainly attributed to the strong bilateral ties between India and the UAE, the growth in investment commitments from the UAE and policy reforms to further facilitate business cooperation between the two countries,” Shardul said Rudra Kumar Pandey, Partner at Amarchand Mangaldas & Co.
UAE investments in India are mainly concentrated in services, maritime, power and construction activities. Pandey added that one of the key factors for the increase in foreign direct investment (FDI) in the UAE is the Comprehensive Economic Partnership Agreement (CEPA) signed on February 18, 2022, between India and the UAE (with effect from May 1, 2022 take effect). “Apart from CEPA, another growth driver for UAE direct investment in India is the UAE’s investment commitments. The UAE has pledged to invest $75 billion in India’s infrastructure sector over a period of time. It has also committed to partnering with India in the renewable energy sector,” Pandey pointed out.
India and the UAE have implemented a comprehensive free trade agreement since May 1 last year. Under the agreement, in addition to relaxing norms to promote investment, many goods from both countries can enter each other’s markets at zero tariffs.
The country accounted for approximately 2.5% of the total foreign direct investment received by India between April 2000 and March 2023. Data shows that India attracted $15.6 billion worth of overseas inflows from the UAE during this period.
Experts say the trade agreement has significantly increased imports and exports between the two countries and increased UAE investment in Indian companies.
Anindya Ghosh, partner at IndusLaw, said: “India’s ongoing relaxation of FDI policies has also given a boost to such investments. Similarly, we are also seeing several Indian startups exploring expansion in the UAE.”
She said that among other institutions, the Abu Dhabi Investment Office through its innovation program provides financial and non-financial incentives for innovation-driven start-ups through data, network, licensing, logistics, real estate, visa and other information. Provide positive support.
“Such expansion ideas/activities by Indian startups also motivate UAE investment funds to invest more in innovative startups in India,” Ghosh added.
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