The United Arab Emirates (UAE), with which India signed a comprehensive free trade agreement last May, will become the fourth largest investor in India in 2022-23, according to government data.
UAE foreign direct investment (FDI) in India in the previous year more than tripled from $1.03 billion in 2021-22 to $3.35 billion, according to DPIIT data sharply increased.
The UAE, which was the seventh largest investor in India in 2021-22, will become the fourth largest investor in India in 2022-23.
The largest investor in India is Singapore, which invested $17.2 billion in FY2011, followed by Mauritius ($6.1 billion) and the United States ($6.0 billion).
“The rapid strengthening of bilateral relations and investment cooperation between India and the United Arab Emirates (UAE) is largely due to strong bilateral relations between India and the UAE, increasing investment commitments from the UAE, and It is due to policy reforms to make it easier to do business,” said Rudra Kumar Pandey, partner of Shardur Amarchand Mangaldas.
The UAE’s investments in India are mainly in sectors such as services, shipping, power and construction activities.
Image credit: Shutterstock
One of the key drivers of the increase in foreign direct investment (FDI) from the UAE is the signing of the Comprehensive Economic Partnership Agreement (CEPA) between India and the UAE on 18 February 2022 (May 2022). (effective from 1st), Pandey added.
“Apart from CEPA, another growth driver of UAE FDI into India is investment commitments from the UAE. We are also committed to partnering with India in the renewable energy sector,” Pandey said.
India and the UAE have been operating a comprehensive free trade agreement since May 1 last year. Under the agreement, the standards for investment promotion will be relaxed and many goods from both countries will have tariff-free access to each other’s markets.
The country accounts for about 2.5% of total FDI received by India from April 2000 to March 2023. Data showed that India attracted $15.6 billion worth of foreign inflows from the UAE during this period.
Experts say the trade deal has significantly boosted imports and exports between the two countries, resulting in more UAE investment in Indian companies.
“The continued liberalization of India’s FDI policy has also boosted these investments, as have several Indian start-ups seeking expansion in the UAE,” said Anindia Ghosh, partner at IndusLaw. said.
Among other agencies, she Through our Innovation Program, we provide active support to innovation-driven start-ups through financial and non-monetary incentives such as information on data, networks, licenses, logistics, real estate, visas and more.
“Such expansion ideas and activities of Indian start-ups will also incentivize UAE-based investment funds to invest more in innovation-based start-ups in India,” Ghosh added.
