According to data from the Department for Promotion of Industry and Internal Trade (DPIIT), the United Arab Emirates (UAE) has become the fourth-largest investor in India during the fiscal year 2023. Foreign direct investment (FDI) from the UAE to India has increased significantly, reaching US$ 3.35 billion, more than three times the amount invested in 2021-22, which was US$ 1.03 billion. This surge in investment is attributed to the strong bilateral relations and investment cooperation between the two countries, as well as increased investment commitments from the UAE and policy reforms aimed at improving the ease of doing business.
In the previous fiscal year, the UAE was the seventh largest investor in India. The top three investors in FY23 were Singapore with US$ 17.2 billion, Mauritius with US$ 6.1 billion, and the United States with US$ 6 billion.
The UAE’s investments in India are mainly focused on sectors such as services, sea transport, power, and construction activities. The signing of the Comprehensive Economic Partnership Agreement (CEPA) between India and the UAE on February 18, 2022, played a crucial role in the increase in FDI from the UAE. This agreement provides zero-duty access to certain goods from both countries in each other’s markets and includes relaxed norms to promote investments. Additionally, the UAE has committed to investing US$ 75 billion in India’s infrastructure sector and partnering with India in the renewable energy sector.
Between April 2000 and March 2023, the UAE accounted for approximately 2.5% or US$ 15.6 billion of the total FDI received by India.
Experts believe that the trade agreement has significantly boosted import and export activities between the two countries, leading to increased investments from the UAE in Indian companies. India’s ongoing liberalization of FDI policy has also played a role in attracting such investments.
Furthermore, Indian startups are exploring expansion opportunities in the UAE, which in turn encourages UAE-based investment funds to invest more in innovative startups in India. Agencies like the Abu Dhabi Investment Office actively support innovation-driven startups by providing financial and non-financial incentives related to data, networking, licensing, logistics, real estate, visas, and more.
